Question 1

How often are futures contracts marked to market?

Accepted Answer

A) Daily 
B) Weekly 
C) Monthly 
D) Quarterly 
A) Daily 
B) Weekly 
C) Monthly 
D) Quarterly

Question 2

Futures are essentially standardized forward contracts.

Accepted Answer

A) True 
 B)False

Question 3

Futures contracts are handled by specialists on futures exchanges.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) stock indexes. 
B) foreign currencies. 
C) commodities. 
D) government bonds. 
A) stock indexes. 
B) foreign currencies. 
C) commodities. 
D) government bonds.

Question 5

Which of the following variables is not established on a futures contract?

Accepted Answer

A) Contract size 
B) Contract premium 
C) Delivery date 
D) Specified grade 
A) Contract size 
B) Contract premium 
C) Delivery date 
D) Specified grade

Question 6

An attempt to exploit differences between the prices of a stock index futures contract and the prices of the underlying stocks is known as:

Accepted Answer

A) index programming. 
B) arbitrage speculation. 
C) index arbitrage. 
D) program speculation. 
A) index programming. 
B) arbitrage speculation. 
C) index arbitrage. 
D) program speculation.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about derivatives is correct?

Accepted Answer

A) Both futures and options represent zero-sum games. 
B) Futures represent a zero-sum game,but options do not. 
C) Options represent a zero-sum game,but futures do not. 
D) Neither options nor futures represents a zero-sum game. 
A) Both futures and options represent zero-sum games. 
B) Futures represent a zero-sum game,but options do not. 
C) Options represent a zero-sum game,but futures do not. 
D) Neither options nor futures represents a zero-sum game.

Question 9

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

Accepted Answer

Hedgers face the risk of buying or selli

Question 10

Explain a long position and a short position in futures trading.

Accepted Answer

A buyer who agrees to purchase

Question 11

Futures exchange members:

Accepted Answer

A) trade strictly for their own accounts. 
B) trade strictly for others. 
C) can trade for their own accounts or for others. 
D) are not allowed to trade on the exchange where they are members. 
A) trade strictly for their own accounts. 
B) trade strictly for others. 
C) can trade for their own accounts or for others. 
D) are not allowed to trade on the exchange where they are members.

Question 12

Who assumes the other side of every futures transaction?

Accepted Answer

A) The dealer 
B) The futures exchange 
C) The commodity producer 
D) The clearinghouse 
A) The dealer 
B) The futures exchange 
C) The commodity producer 
D) The clearinghouse

Question 13

What is the role of the clearinghouse in futures trading?

Accepted Answer

The clearinghouse assumes the position b

Question 14

Briefly discuss the concept of margin in futures trading.

Accepted Answer

The item being traded is not transferred

Question 15

What are the methods of settling a futures contract?

Accepted Answer

A purchaser of a futures contract can ta

Question 16

Index arbitrage attempts to exploit the differences between the prices on two different stock indices.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements about futures trading is incorrect?

Accepted Answer

A) There are no specialists on futures exchanges. 
B) All futures contracts are eligible for margin trading. 
C) Trading is halted for the day if the price reaches the daily limit. 
D) The uptick rule applies to the shorting of futures contracts. 
A) There are no specialists on futures exchanges. 
B) All futures contracts are eligible for margin trading. 
C) Trading is halted for the day if the price reaches the daily limit. 
D) The uptick rule applies to the shorting of futures contracts.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a characteristic of futures contracts?

Accepted Answer

A) They are marked to market daily. 
B) They can be sold short but only on an uptick. 
C) They are handled by specialists on futures exchanges. 
D) They have no daily price limits. 
A) They are marked to market daily. 
B) They can be sold short but only on an uptick. 
C) They are handled by specialists on futures exchanges. 
D) They have no daily price limits.

Question 20

The number of unliquidated futures contracts at any point in time is called:

Accepted Answer

A) margin. 
B) open interest. 
C) hedged position. 
D) marked to market position. 
A) margin. 
B) open interest. 
C) hedged position. 
D) marked to market position.

Exam 20: Futures

How often are futures contracts marked to market?

Futures are essentially standardized forward contracts.

Futures contracts are handled by specialists on futures exchanges.

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

Which of the following variables is not established on a futures contract?

An attempt to exploit differences between the prices of a stock index futures contract and the prices of the underlying stocks is known as:

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

Which of the following statements about derivatives is correct?

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

Explain a long position and a short position in futures trading.

Futures exchange members:

Who assumes the other side of every futures transaction?

What is the role of the clearinghouse in futures trading?

Briefly discuss the concept of margin in futures trading.

What are the methods of settling a futures contract?

Index arbitrage attempts to exploit the differences between the prices on two different stock indices.

Which of the following statements about futures trading is incorrect?

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

Which of the following is a characteristic of futures contracts?

The number of unliquidated futures contracts at any point in time is called:

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