Exam 20: Futures Contracts

In August, Rex sold a futures contract on corn at $3.20 per bushel. The contract had a November expiration date. At expiration, corn was selling at $3.05 per bushel. What profit/loss did Rex experience on the contract? Assume Rex had no other position in corn.

In the case of a futures contract, buyers can settle a contract:

Which of the following is a characteristic of futures contracts?

A forward contract differs from a futures contract in that:

The calendar or time spread is also known as the intramarket spread, and involves contracts for two different settlement months, such as buying a March contract and selling a June contract.

What is the difference between hedgers and speculators in the futures markets?

The underlying asset type that futures contracts were first traded on were:

In a margin account, if the account balance falls below the maintenance margin, a margin call is triggered.

How often are futures contracts marked to market?

Are futures - commodity, interest-rate, stock-index, or currency - appropriate for most individual investors?

What is the role of the clearinghouse in futures trading?

Compare the obligation entered into in a futures contract to the obligation in an options contract.

U.S. futures trading is regulated primarily by the CFTC.

Interest rate futures are not currently available on which of the following securities?

Stock-index futures may be settled either by cash or by delivery of securities.

One difference between a hedger and a speculator is that the hedger:

The DJIA is the most popular stock-index futures contract.

Futures are essentially standardized forward contracts.

Investors can speculate on interest rate declines by purchasing interest rate futures.

Which of the following statements about the basis risk on futures is correct?