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Free ICBRR Exam Braindumps (page: 39)

Page 39 of 87
PDF with 342 Questions

When the cost of gold is $1,100 per bullion and the 3-month forward contract trades at $900, a commodity trader seeks out arbitrage opportunities in this relationship. To capitalize on any arbitrage opportunities, the trader could implement which one of the following four strategies?

  1. Short-sell physical gold and take a long position in the futures contract
  2. Take a long position in physical gold and short-sell the futures contract
  3. Short-sell both physical gold and futures contract
  4. Take long positions in both physical gold and futures contract

Answer(s): A



To estimate the price of gold forwards, an investment analyst focuses on the cost of holding physical gold (bullion) and the cost of shorting the same. Given that physical gold spot price is $1,000, the annual risk-free rate is 5%, and the gold lease rate equals 2% annually, the analyst's best estimate of the gold forward price to equal

  1. $950
  2. $1030
  3. $1070
  4. $1100

Answer(s): B



Which one of the following four statements about equity indices is INCORRECT?

  1. Equity indices are numerical calculations that reflect the performance of hypothetical equity portfolios.
  2. Equity indices do not trade in cash form, rather, they are meant to track the overall performance of an equity market.
  3. Capitalization-weighted equity indices are not generally considered better to track the performance of an overall market.
  4. Price-weighted equity indices give greater weight to shares trading at high prices.

Answer(s): C



To estimate the forward price of oil, a commodity trader would most likely use the following pricing relationship:

  1. Oil forward price = Expected future oil price ± Oil market risk premium
  2. Oil forward price = Expected future oil price ± storage cost + Oil market risk premium
  3. Oil forward price = Expected future oil price ± Oil storage cost + (1 + Oil market risk premium)
  4. Oil forward price = Expected future oil price ± Oil storage cost + (1 - Oil market risk premium)

Answer(s): A



Page 39 of 87



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Vey commented on May 27, 2023
highly appreciate for your sharing.
CAMBODIA
upvote

Vey commented on May 27, 2023
Highly appreciate for your sharing.
CAMBODIA
upvote