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NEW QUESTION: 1
It is October. A grower of crops is concerned that January temperatures might be too low and destroy his crop.
A heating-degree-days futures contract (HDD futures contract) is available for his city. What would be the best course of action for the grower?
A. In January, buy January HDD contracts
B. In October, sell January HDD contracts
C. In October, buy September HDD contracts
D. In October, buy January HDD contracts
Answer: D
Explanation:
Explanation
This question is based upon a weather derivative contract traded on the CME in the US. For each day,
'Heating-Degree-Days' (HDD) is calculated as equal to 65 degrees Fahrenheit minus the daily average temperature. The daily average temperature is based upon the temperature reported by the Earth Satellite Corporation using a specified automated weather station. Based upon daily values of HDD, an aggregated number called the 'CME degree days index' is calculated for each contract month. In other words, the index for a particular month is just the aggregation of the 'HDD' value for each of the days of that month. Each contract settles at the end of the month at a value equal to $20 x Degree Days Index. (In a similar way, 'Cooling Degree Days' are also calculated and a futures contract offered, except that CDD is equal to the average daily temperature minus 65 degrees). (Source: CME's website at CMEGroup.com) In the given question, we are interested in hedging against the possibility of the temperature being too low.
This means we should buy the HDD futures contract (the lower the temperature, the higher the difference of the average temperature from 65 degrees, and the higher the settlement). Therefore Choice 'b' is the correct answer. The lower the actual temperature turns out to be, the higher the payout to the grower. It would not be wise to wait till January to buy the contract as by then the prices of the contract would have already risen if the grower's fears of a colder January appear to be coming true. He can hedge his exposure by immediately locking in the January prices.

NEW QUESTION: 2
Which of the following approaches provides the lowest cost for Amazon Elastic Block Store snapshots while giving you the ability to fully restore data?
A. Maintain two snapshots: the original snapshot and the latest incremental snapshot.
B. Maintain the most current snapshot, archive the original and incremental to Amazon Glacier.
C. Maintain a volume snapshot; subsequent snapshots will overwrite one another
D. Maintain a single snapshot the latest snapshot is both Incremental and complete.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/ebs-deleting-snapshot.html

NEW QUESTION: 3
Drag and drop the items on the left to the correct category on the right.
Select and Place:

Answer:
Explanation:

NEW QUESTION: 4
DRAG DROP

Answer:
Explanation:

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