You are a market-maker working at a large broker-dealer in the FX spot market. You are responsible for making a market in the AUD vs. the USD. Suppose a customer sells you an abnormally large quantity of AUD. How would you adjust your quotes to attract offsetting order-flow to decrease your net position in this market? Answer with respect to bids and asks for the spot rate that is directly quoting for AUD. You would decrease both your bid price and your ask price for S(USD/AUD). You would decrease your bid price and increase your ask price for S(USD/AUD). O You would increase your bid price and decrease your ask price for S(USD/AUD). You would increase both your bid price and your ask price for S(USD/AUD). None of the other answers.

You are a market-maker working at a large broker-dealer in the FX spot market. You are responsible for making a market in the AUD vs. the USD. Suppose a customer sells you an abnormally large quantity of AUD. How would you adjust your quotes to attract offsetting order-flow to decrease your net position in this market? Answer with respect to bids and asks for the spot rate that is directly quoting for AUD. You would decrease both your bid price and your ask price for S(USD/AUD). You would decrease your bid price and increase your ask price for S(USD/AUD). O You would increase your bid price and decrease your ask price for S(USD/AUD). You would increase both your bid price and your ask price for S(USD/AUD). None of the other answers.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Select all of the following statements that accurately compare or contrast forwards and options: Group of answer choices Taking naked long positions in either a call or forward will lead to an overall long position in the underlying security. Options and forwards always have identical payoffs if the spot price remains the same. Both options and forwards can be used to reduce exposure to foreign exchange risk. Going long a naked put option and going short a naked forward both cause unlimited liability. Both options and forwards require the payment of a premium at the initiation of the contract. Forward contracts impose obligations on both parties in the transaction. Options contracts only impose an obligation on one party.
The ability to buy on margin is one advantage of futures. Another is the ease with which one can alter one’s holdings of the asset. This is especially important if one is dealing in commodities, for which the futures market is far more liquid than the spot market.
Which of the following statements is most accurate? A stop-sell order is placed by a bullish investor above the current market price. A stop-buy order is placed by a bearish investor above the current market price. A stop-sell order is placed by a bearish investor below the current market price. A stop-sell order is placed by a bullish investor at the current market price. A stop-sell order is placed by a bearish investor at the current market price.
The only way the investor can get above average profit through investment in different markets by taking advantage of any abnormality when they occur and abnormality can be exploited because there will never be full market efficiency. One more important point that is for most of the investors, a passive, buy-and-hold, long-term strategy is appropriate because capital markets are mostly unpredictable with random movements in price up and down. "and the investment mantra is: - If intrinsic value is more and market price is less buy the security and if it is opposite sell the security Do you think this statement is correct? write your views by giving some examples of different forms.
In an efficient market, the price of a security will: Multiple Choice always rise immediately upon the release of new information with no further price adjustments related to that information. react to new information over a two-day period after which time no further price adjustments related to that information will occur. rise sharply when new information is first released and then decline to a new stable level by the following day. react immediately to new information with no further price adjustments related to that information.
What is correct option and incorrect option with explanation please without plagiarism please Introduction and explanation and final answer required please
Fama (2018) updated his original efficient market hypothesis by arguing that markets are informationally efficient, but not necessarily fully efficient. He proposed the idea of a "liquidity premium" to explain some deviations from fundamental values. DISCUSS.
An increase in a firms inclination to pay dividends may be because of a decline in profitable investment opportunities in the future. is this true or false and why. relevant or not, frequent changes in dividend policy can harm a firm. is this true or false and why. what is the essential feature of a forward contract that makes a futures contract a type of forward contract,
What is the additional assumption imposed by the CAPM model compared to the Markowitz procedures? O No taxes and transaction costs O Investors are rational, mean-variance optimizers O Investors can borrow or lend at a common risk-free rate, and short selling is allowed O Markets are perfectly competitive and investors are price takers
You recently found out that when the market is in recession, ALL assets seem to suffer from some degree of liquidity problems as there are less trades than usual, and thus it is hard to sell an asset without losing some of its fair value. So, you concluded that at least some portion of liquidity risk must be systematic in nature and therefore it must be compensated by the market. To verify this, you cut the market portfolio in half by the illiquidity measure developed by Amihud (2002) [So that you have one relatively liquid portfolio and one relatively illiquid portfolio. Assume that this measure is reliable.] and calculated the market liquidity risk premium as follows: Market liquidity risk premium = Expected return on the illiquid portfolio - Expected return on the liquid portfolio = [E(RIL) - E(RL)] Then you formed 5 portfolios from the entire market based on liquidity (Amihud measure) and estimate the factor loading β (called liquidity beta) of each portfolio using [RIL - RL] as…
Behavioural finance is arguably most useful in explaining asset prices when there are significant numbers of “noise traders” and limits to arbitrage. Why is this so?

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