国际财务-管理课后习题答案chapter 7

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1、CHAPTER7FUTURESANDOPTIONSONFOREIGNEXCHANGESUGGESTEDANSWERSANDSOLUTIONSTOEND-OF-CHAPTERQUESTIONSANDPROBLEMSQUESTIONS1.Explainthebasicdifferencesbetweentheoperationofacurrencyforwardmarketandafuturesmarket.Answer:TheforwardmarketisanOTCmarketwheretheforwardcontractforpurchaseorsaleofforeig

2、ncurrencyistailor-madebetweentheclientanditsinternationalbank.Nomoneychangeshandsuntilthematuritydateofthecontractwhendeliveryandreceiptaretypicallymade.Afuturescontractisanexchange-tradedinstrumentwithstandardizedfeaturesspecifyingcontractsizeanddeliverydate.Futurescontractsaremarked-to

3、-marketdailytoreflectchangesinthesettlementprice.Deliveryisseldommadeinafuturesmarket.Ratherareversingtradeismadetocloseoutalongorshortposition.2.Inorderforaderivativesmarkettofunctionmostefficiently,twotypesofeconomicagentsareneeded:hedgersandspeculators.Explain.Answer:Twotypesofmarketp

4、articipantsarenecessaryfortheefficientoperationofaderivativesmarket:speculatorsandhedgers.Aspeculatorattemptstoprofitfromachangeinthefuturesprice.Todothis,thespeculatorwilltakealongorshortpositioninafuturescontractdependinguponhisexpectationsoffuturepricemovement.Ahedger,on-the-other-han

5、d,desirestoavoidpricevariationbylockinginapurchasepriceoftheunderlyingassetthroughalongpositioninafuturescontractorasalespricethroughashortposition.Ineffect,thehedgerpassesofftheriskofpricevariationtothespeculatorwhoisbetterable,oratleastmorewilling,tobearthisrisk.3.Whyaremostfuturesposi

6、tionsclosedoutthroughareversingtraderatherthanheldtodelivery?Answer:Inforwardmarkets,approximately90percentofallcontractsthatareinitiallyestablishedresultintheshortmakingdeliverytothelongoftheassetunderlyingthecontract.Thisisnaturalbecausethetermsofforwardcontractsaretailor-madebetweenth

7、elongandshort.Bycontrast,onlyaboutonepercentofcurrencyfuturescontractsresultindelivery.Whilefuturescontractsareusefulforspeculationandhedging,theirstandardizeddeliverydatesmakethemunlikelytocorrespondtotheactualfuturedateswhenforeignexchangeIM-12transactionswilloccur.Thus