F5: Financial Instruments & Derivatives Flashcards
1
Q
Formula for the intrinsic value
A
Market Price - Strike (exercise) Price
2
Q
What are the characteristics of derivatives?
A
NUNS
- No significant net investment
- An Underlying and a Notational amount
- Net settlement
3
Q
What are the examples of derivatives?
A
- Option contract
- Future contract
- Forward contract
- Interest rate
- Foreign currency swap
4
Q
Define put and call option
A
- Put option: Right to sell shares
- Call option: Right to acquire
5
Q
Where is the gain/loss reports on fair value hedge?
A
Income Statement
6
Q
Where is the gain/loss reports on cash flow hedge?
A
Other Comprehensive Income (OCI)
7
Q
Where is the gain/loss reports on foreign currency hedge?
A
Other Comprehensive Income (OCI)
