国际财务管理课后习题答案chapter 7.doc

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

2、orsaleofforeigncurrencyistailor-madebetweentheclientanditsinternationalbank.Nomoneychangeshandsuntilthematuritydateofthecontractwhendeliveryandreceiptaretypicallymade.Afuturescontractisanexchange-tradedinstrumentwithstandardizedfeaturesspecifyingcontractsizeanddeliverydate.

3、Futurescontractsaremarked-to-marketdailytoreflectchangesinthesettlementprice.Deliveryisseldommadeinafuturesmarket.Ratherareversingtradeismadetocloseoutalongorshortposition.2.Inorderforaderivativesmarkettofunctionmostefficiently,twotypesofeconomicagentsareneeded:hedgersandsp

4、eculators.Explain.Answer:Twotypesofmarketparticipantsarenecessaryfortheefficientoperationofaderivativesmarket:speculatorsandhedgers.Aspeculatorattemptstoprofitfromachangeinthefuturesprice.Todothis,thespeculatorwilltakealongorshortpositioninafuturescontractdependinguponhisex

5、pectationsoffuturepricemovement.Ahedger,on-the-other-hand,desirestoavoidpricevariationbylockinginapurchasepriceoftheunderlyingassetthroughalongpositioninafuturescontractorasalespricethroughashortposition.Ineffect,thehedgerpassesofftheriskofpricevariationtothespeculatorwhois

6、betterable,oratleastmorewilling,tobearthisrisk.3.Whyaremostfuturespositionsclosedoutthroughareversingtraderatherthanheldtodelivery?Answer:Inforwardmarkets,approximately90percentofallcontractsthatareinitiallyestablishedresultintheshortmakingdeliverytothelongoftheassetunderly

7、ingthecontract.Thisisnaturalbecausethetermsofforwardcontractsaretailor-madebetweenthelongandshort.Bycontrast,onlyaboutonepercentofcurrencyfuturescontractsresultindelivery.Whilefuturescontractsareusefulforspeculationandhedging,theirstandardizeddeliverydatesmakethemunlikelyto

8、correspondtotheactualfuturedateswhenforeignexchangetransactionswilloccur.Thus,they