BMGT 444 Final questions with complete
solutions A+
Forward contract - correct answer ✔✔agreement to buy/sell some asset to another party at
some point in the future for a fixed amount.
Long position - correct answer ✔✔party has agreed to buy the corn in the future
Short position - correct answer ✔✔Party has agreed to sell the corn in the future
futures contract - correct answer ✔✔Agreement to buy/sell an asset for a certain price at a
certain time in the future (difference: futures contract is traded on an exchange and
standardization)
Call option - correct answer ✔✔option to buy a certain asset by a certain date for a certain price
before exercise date
Put option - correct answer ✔✔Option to sell a certain asset by a certain date for a certain price
before exercise date
American option - correct answer ✔✔can be exercised at any time during its life
European option - correct answer ✔✔Can be exercised only at maturity
Option - correct answer ✔✔Gives the holder the right to buy or sell at a certain price
solutions A+
Forward contract - correct answer ✔✔agreement to buy/sell some asset to another party at
some point in the future for a fixed amount.
Long position - correct answer ✔✔party has agreed to buy the corn in the future
Short position - correct answer ✔✔Party has agreed to sell the corn in the future
futures contract - correct answer ✔✔Agreement to buy/sell an asset for a certain price at a
certain time in the future (difference: futures contract is traded on an exchange and
standardization)
Call option - correct answer ✔✔option to buy a certain asset by a certain date for a certain price
before exercise date
Put option - correct answer ✔✔Option to sell a certain asset by a certain date for a certain price
before exercise date
American option - correct answer ✔✔can be exercised at any time during its life
European option - correct answer ✔✔Can be exercised only at maturity
Option - correct answer ✔✔Gives the holder the right to buy or sell at a certain price
