DR .V .

R GODHANIA COLLEGE OF ENGINEERING AND

TECHNOLOGY, PORBANDAR.
DEPARMENT OF MANAGEMENT (SEMESTER- )

INTERNAL EXAMINATION
ACADEMIC YEAR: 2021-2022
SUBJECT: Financial Derivatives DATE: 06/01/2022
SUBJECT CODE: 4539222 TOTAL MARKS: 30
TIME: 90MINS
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1) What do you understand by risk? What are the different ways of classifying and managing
them? (7)
OR
What are derivatives? Explain major types of exchange traded derivative contract.

2) Uses of Greek words in Options. (7)

OR
What is Swaps? Explain the types of Swaps in Detail.

3) An Investor sales 5 future contracts on gold. Future Price is Rs. 15500. The Initial Margin is
4% and Minimum Margin is 90% of Initial Margin. The contract size is 100. From the following
information prepare margin account for short position. (GTU-2018)
Day – 1 1552 Day – 6 1534
Day – 2 1530 Day – 7 1560
Day – 3 1541 Day – 8 1563
Day – 4 1522 Day – 9 1567
Day - 5 1544 Day - 10 1587

4) Discuss American Options Vs. European Options. (GTU 2018) (7)

OR
4) Hyundai motors exports cars to Germany, and every three months, it receives EUR 500,000
from car shipments. On March 1, the exchange rate between the Indian rupee and euro is EUR 1 =
INR 70.7242. the euro interest rate is 6% per annum, while the interest rate in India is 9% per
annum. Hyundai wants to hedge its euro receipt through forward contracts for the next 6 months.
The 180-days forward rate is EUR 1 = 71.5642. (GTU-2019)
(1) What type of hedging strategy could be suitable for Hyundai?
(2) Calculate the 90 days and 180 days theoretical forward rate.
(3) Identify whether there is any arbitrage opportunity.
(4) If there is an arbitrage opportunity, calculate the arbitrage profit for EUR 500,000.
 (02)
5) Define terms (any 2)

1) Arbitrage

2) Gama

3) Swaptions