FINC306 LATEST 2026 EXAM QUESTIONS AND ANSWERS GUARANTEE

FINC306 LATEST 2026 EXAM QUESTIONS AND ANSWERS
GUARANTEE A+
✔✔Lecture 2 questions - ✔✔L2

✔✔Short payoff of forward - ✔✔FtT - ST

✔✔Futures
- Structure
- transaction
- risk of default
- Purpose
- Liquidity - ✔✔- standardised
- Exchange traded
- Low risk
- Speculation
- High, due to exchange traded

✔✔Forwards
- Structure
- transaction
- risk of default
- Purpose
- Liquidity - ✔✔- Customised
- OTC
- High, people may default
- Hedging
- Low, not circulating heaps

✔✔Call option - ✔✔Right (but not obligation) to buy an underlying asset in the future,
set at a price today

✔✔For a call option, what is the seller required to do if the buyer exercises his right to
buy? - ✔✔must deliver the contract

✔✔Payoff function for long call - ✔✔CT = max(ST-K,0)

✔✔CT
T
K - ✔✔CT = the value of the call at expiration
T = expiration date
K = Strike price/exercise price = the amount paid by the option buyer for the asset if
option is exercised