Interest rate swap

Kingdom of Saudi Arabia

Ministry of Education

Saudi Electronic University

A picture containing text, outdoor, sign  Description automatically generated المملكة العربية السعودية

وزارة التعليم

الجامعة السعودية الإلكترونية



College of Administrative and Financial Sciences


FIN-405-Financial Derivatives

Due Date: 05/05/2022@ 23:59


Course Name: Financial Derivatives Student’s Name:
Course Code: FIN-405 Student’s ID Number:
Semester: Second CRN:
Academic Year:2021-22-2nd



For Instructor’s Use only

Instructor’s Name:
Students’ Grade:

Marks Obtained/Out of 10

Level of Marks: High/Middle/Low



· The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.

· Assignments submitted through email will not be accepted.

· Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.

· Students must mention question number clearly in their answer.

· Late submission will NOT be accepted.

· Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.

· All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).

· Submissions without this cover page will NOT be accepted.


Assignment 3

Submission Date by students: 05 May 2022-11:59 PM(Thursday)

Place of Submission: Students Grade Centre via blackboard.

Marks: 10 Marks


Q1. Explain the classification of Future traders by trading style? ( Marks-3)


Q2. Suppose there is a commodity in which the expected future spot price is $60.To induce investors to buy futures contracts, a risk premium of $4 is required. To store the commodity for the life of the futures contract would cost $5.50.

Find the future s price? (Marks-3)



Q3. Explain the difference between a short hedge and a long hedge. ( Marks-2)


Q4. Briefly explain Interest rate swap and currency swap . (Marks-2)

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