Which of the Following Strategies Replicates a Long Position in an FRA

question 53

Multiple Choice

Which of the following strategies replicates a long position in an FRA?

• A)long a long term Eurodollar time deposit and short a short-term Eurodollar time deposit
• B)long a Eurodollar futures and short a Eurodollar option
• C)long a Eurodollar option on a futures
• D)short a long-term Treasury bond futures and short a short-term Treasury bond futures
• E)long a receiver swaption

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Definitions:

Hydrogen Atoms

The simplest and most abundant atom in the universe, consisting of one proton and one electron.

Covalent Bond

A type of chemical bond where two atoms share one or more pairs of valence electrons to achieve stability.

Intermolecular

Relating to or occurring between molecules, such as forces that govern the interactions and phase changes of substances.

Intramolecular

Describes forces or reactions occurring within a single molecule, as opposed to between different molecules.