Treasury and Risk Management

Treasury and Risk Management
Assignment 1 (Treasury and Risk Management – Master Degree)
Please answer the following questions briefly and succinctly (max 400 words). This assignment is to be submitted at the first seminar. 20% of the overall marks are awarded for this assignment.
**Clarified by the lecturer. Important to note. **
1. The 400-word limit applies to the whole assignment, not individual questions.
2. For assignment 1 as it is a structured assessment format, the following requirements under Module Assessment Components: “For each question, there should be a brief introduction, the body of the answer and a conclusion section.” does not apply.
Question 1
Why are futures and options contracts generically referred to as “derivatives”?
Question 2
What is the difference between a European and an American option, as far as the buyer and the writer are concerned?
Question 3
You are a speculator and you think stock prices will increase. Should you buy a call or a put option?
Question 4
Under what circumstances would you make a profit at maturity from a long position in a futures contract on ‘live hogs’?
Question 5
Who might find a futures contract on (the price of) orange juice, useful?