Risk Management Quiz Question

Which one of the following security combinations replicates a short forward contract with forward price F and expiration date T. Assume all contracts reference the same underlying security and all options are European.

A) A long call option and a short put option, both strike price F and expiration date T.
B) A long risk-free bond with par value F and maturity date T, and a short position in the underlying security.
C) A short call option and a short put option, both with strike price F and expiration date T.
D) A short risk-free bond with par value F and maturity date T, and a long position in the underlying security.

Reveal Answer

B) A long risk-free bond with par value F and maturity date T, and a short position in the underlying security.

What is the Risk Management Professional Certificate?

Develop a comprehensive survey of the practice of Risk Management. The major types of risk are identified, risk management tools and techniques are reviewed and financial regulation is covered. Delegates will work through the annual risk report of a publicly traded financial institution. A number of case studies are analyzed to illustrate key principles of risk measurement and management.