Explanation
Futures initial margins are determined by the exchange. SPAN is the name of a framework the CME uses to determine margins. Only Choice 'd' is correct.

Explanation
A forward contract is a derivative contract, and has a delta of 1. Therefore Choice 'd' is the correct answer.
This is because the value of a forward contract is given by S - Ke^(-rt), where S is the current spot price, r the risk free rate, K the forward price, and t the time to maturity. As S changes from S to (S + S), the value changes to (S + S) - Ke^(-rt), ie the change in value is exactly S in response to a change in the price of the underlying by S. Therefore the forward contract has a delta of 1.
All other choices are incorrect.
Note that this is different from the delta of a futures contract which is different from 1, and equal to e^(rt), a number greater than 1.

Explanation
Callable corporate bonds need to be priced lower and therefore yield more to investors as they are likely to be called by the issuer when interest rates fall and the issuer finds it attractive to refinance the debt using new cheaper debt.
They are most unlikely to be called when their prices have fallen because falling prices indicate higher rates, which means the issuer is able to fund himself at a cheaper rate.
Because of their callable feature, they are less convex and may actually carry negative convexity.
Therefore Choice 'b' is the only correct statement and the right answer.

Explanation
When hedging an equity portfolio with index futures, the number of futures contracts to hold is given by the
[beta x value of portfolio/value of one futures contract]. Therefore Choice 'a' is the correct answer.
The volatility, risk free rate have nothing to do with determining the number of futures contracts to hold.
Systematic risk is expressed in the form of beta. Therefore the other choices are incorrect.

Explanation
The principle of maximum expected utility requires maximizing the expected utilities of the different possible outcomes of a gamble weighted according to the probabilities of their occurrence. This is very difficult to apply in practice in the financial markets where utility functions and various other inputs for maximizing expected utility are not known. Markowitz suggested the mean-variance criterion as a simplification of the principle of maximum expected utility, and it can be shown that the mean-variance gives a good approximation when the range of outcomes under consideration does not exceed plus or minus one coefficient of risk tolerance. (Recall that the coefficient of risk tolerance is the value of x where the gambler is indifferent between equal probabilities of winning x or losing x/2.)