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Thread: FRM and general information

  1. #51
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    The put is in the money, so the put buyer will get 10. However the call buyer will lose the money.
    So answer is D.

  2. #52
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    The answer shud be C.

    Thanks for giving Q&A reg FRM. I visited ur website and found that u basically assist student reg CSI. Can u plz briefly explain abt that..??

    Regards,
    Shubhojit.

  3. #53
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    Thanks Financetutelage for starting this initiative. All the best!

  4. #54
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    Yes, you got it the answer is D.

    Solution:
    Let X= Strike Price and S = stock price, then
    Payoff for put buyer = max (0, X - S) = max (0, 70-60) = 10
    Payoff for put writer = -max (0, X – S) = -max(0, 70-60) = -10
    Payoff for call buyer = max(0, S – X) = max(0, 60-90) = 0
    Payoff for call writer = -max(0, S – X) = -max(0, 60-90)=0

  5. #55
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    2. Compute the forward price given payoff to long position is $20 and spot price at maturity is $30

    Possible Answers:
    A. $-10
    B. $50
    C. $10
    D. -$50

  6. #56
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    CSC from CSI details financetutelage.com

    CSI offers CSC same as other certificaitons like FRM from GARP. Keep visiting www.financetutelage.com to learn more on global financial certifications

  7. #57
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    Forward price should be $50 as the long position will make profit of $20 above the spot price.

  8. #58
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    I guess it should be option D.

    Btw, certification from CSI is recognized all over the world ?? I hv no idea abt it. Plz clarify.

    Regards,

  9. #59
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    Answer: C

    Solution: Payoff to long position = spot price at maturity – Forward price
    i.e., Forward Price = spot price at maturity - Payoff to long position
    = 30 – 20
    Forward price = $10

  10. #60
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    FRM L1 Question3

    3. Choose answers that apply to Clearinghouse


    Possible Answers:

    A. Acts as a counterparty for every trade that takes place in the exchange
    B. Members must post a clearing margin to the clearinghouse
    C. Clearinghouse can never default
    D. All of the above

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