罗斯《公司理财》英文习题答案DOCchap025.docVIP

Chapter 25: Derivatives and Hedging Risk 25.1 a. A forward contract is an agreement to either purchase or sell a specific amount of a specific good on a specific date at a specific price. It represents an obligation on both parties—the party agreeing to buy in the future at a specified price and the party agreeing to sell in the future at a specified price. b. A futures contract is identical to a forward contract in that it is an agreement to either purchase or sell a specific amount of a specific good on a specific date at a specific price. It represents an obligation on both parties—the party agreeing to buy in the future at a specified price and the party agreeing to sell in the future at a specified price. The difference between futures and forwards is that futures are standardized contracts trading on exchanges with daily resettlement while forwards are agreements tailored to the needs of the counterparties. 25.2 1. Futures contracts have standard features and are traded on exchanges, while forward contracts are less standard and are not traded on exchanges. 2. Risk positions in futures are generally reversed prior to delivery, while forward contracts usually involve delivery. 3. The futures market is largely insulated from default risk by features such as mark- to-market and margin call provisions. 25.3 a. i) $5.10 ii) $5.00 iii) $0.03 + $0.05 + $0.04 - $0.02 - $5.10 = -$5.00 b. i) $4.98 ii) $5.00 iii) $0.03 + $0.05 + $0.04 - $0.02 - $0.12 - $4.98 = -$5.00 25.4 = Face value (1 + ) / (1 + )11 Both and decreased, but has 11th power. Thus, (1 + )11 has more effect of downward shift. Therefore, the price of the forward contract will increase. 25.5 a. Sell a futures contract. b. A short hedge is a wise strategy if you must hold inventory, the price of which may change before you can sell it. c. Buy a futures contract. d. A long hedge is a wise strategy if you are locked into a future selling price