15) Which of the following are least likely to use weather derivatives? A) Energy producers B) Food

15)
Which of the following are least likely to use weather derivatives?
A)
Energy producers
B)
Food and drink manufacturers
C)
Companies in the leisure industry
D)
Automobile manufacturers

16)
When a reinsurer covers the layer of hurricane losses for an insurance company
between $20 million and $30 million, which of the following describes the
insurance company’s losses?
A)
A bull spread on total hurricane losses
B)
A bear spread on total hurricane losses
C)
A long call option on total hurricane losses
D)
A short put option on total hurricane losses

17)
An August CDD weather option is offered on the cumulative monthly CDD at an
Atlanta weather station. An investor has a long call with a strike price of 375
and a short call with a strike price of 400. The payment is $10,000 per degree
day. What is the maximum payoff?
A)
$500,000
B)
$250,000
C)
$100,000
D)
$50,000

18)
Which of the following is the average of CDD and HDD for a day?
A)
The highest temperature during the day
B)
The lowest temperature during the day
C)
The average temperature during the day
D)
None of the above

19)
Which of the following is the basis for calculating HDD and CDD?
A)
The average temperature during the day
B)
The average of the highest and lowest temperature during the day
C)
The temperature at 12 noon during the day
D)
None of the above

20)
Which of the following might we expect to be the result of global warming?
A)
An decrease in observed CDDs
B)
An increase in observed CDDs
C)
An increase in observed HDDs
D)
None of the above