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NEW QUESTION: 1
Basis risk between spot and futures prices for stock indices is caused by changes in:
I. The risk free rate, or the funding cost for the futures
II. Expected dividend yield
III. Volatility of the underlying stock index
A. I and II
B. I and III
C. I, II and III
D. II and III
Answer: A
Explanation:
Explanation
Basis risk between spot and futures prices is the risk that the prices of the futures contract will not move in lockstep with the spot prices. Basis risk creates a problem when investors are trying to get exposure to a stock price through a futures contract, or are trying to hedge a position using a futures contract, and over time the prices of these two diverge.
To understand why basis risk arises, we need to think about how futures prices are determined. Futures prices are nothing but the spot prices plus the carrying cost, ie what it would cost for the seller of the contract to buy the spot security and hold it till the time of delivery in the future. During this holing period, the seller of the contract has to pay interest to fund his purchase in the spot market, and also receives and distributions such as dividends. In the case of commodity futures, he may also have to pay storage charges. When determining the futures prices, it is not known with complete certainty as to what the carrying costs will ultimately turn out to be - interest rates may change, dividends may turn out to be more or less, leading to changes in the futures prices without changes in the spot prices. This gives rise to basis risk.
Therefore changes to the risk free rate, which is a proxy for the true funding cost of the futures position and changes in expected dividends creates basis risk. Volatility of the underlying is irrelevant for futures.
Therefore Choice 'b' is the correct answer.

NEW QUESTION: 2
A team's goal is to improve information flow in a payroll function. They make thirty-three Post-It@ notes, each listing an issue for further investigation. After some discussion, they group them into four categories: mandated record keeping, privacy concerns, insurance concerns and transfer concerns.
This grouping process is best described by which approach to problem solving?
A. Affinity diagram
B. Inter-relationship digraph
C. Matrix diagram
D. Prioritization matrix
E. Process decision program chart
F. Activity network diagram
G. Tree diagram
Answer: A

NEW QUESTION: 3
A company named Contoso, Ltd. wants to standardize the Microsoft Core CAL Suite for all of its users. Contoso indicates that it has a fluctuating user count due to the seasonality of its business.
You need to recommend a licensing program for Contoso.
What should you recommend?
A. Open
B. Microsoft Products and Services Agreement (MPSA
C. Enterprise Subscription Agreement
D. Enterprise Agreement
Answer: C
Explanation:
Explanation: https://ladylicensing.wordpress.com/page/14/
* Enterprise Subscription Agreement permits you to reduce your PC count at the anniversary date if you have a fluctuating or seasonal business, bear in mind you cannot reduce lower than the program minimum of 250PCs

NEW QUESTION: 4
CORRECT TEXT
A requirement specification includes a description of the properties of the requirement. Which of the properties listed below can be used as requirement attributes and which cannot? Please indicate true or false. (2 Points)

Answer:
Explanation:
A,C,E,G,I

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