Question 1

Who guarantees that a futures contract will be fulfilled

Accepted Answer

A) The buyer 
B) The seller 
C) The broker 
D) The clearinghouse 
E) Nobody 
A) The buyer 
B) The seller 
C) The broker 
D) The clearinghouse 
E) Nobody

Question 2

Which of the following items is not specified in a futures contract
I. The contract size
II. The maximum acceptable price range during the life of the contract
III. The acceptable grade of the commodity on which the contract is held
IV. The market price at expiration
V. The settlement price

Accepted Answer

A) II and IV 
B) I, III, and V 
C) I and V 
D) I, IV, and V 
E) I, II, III, IV, and V 
A) II and IV 
B) I, III, and V 
C) I and V 
D) I, IV, and V 
E) I, II, III, IV, and V

Question 3

If a trader holding a long position in oil futures fails to meet the obligations of a futures contract, the party that is hurt by the failure is

Accepted Answer

A) the offsetting short trader. 
B) the oil producer. 
C) the clearinghouse. 
D) the broker. 
E) the commodities dealer. 
A) the offsetting short trader. 
B) the oil producer. 
C) the clearinghouse. 
D) the broker. 
E) the commodities dealer.

Question 4

Futures contracts __________ traded on an organized exchange, and forward contracts __________ traded on an organized exchange.

Accepted Answer

A) are not; are 
B) are; are 
C) are not; are not 
D) are; are not 
E) are; may or may not be 
A) are not; are 
B) are; are 
C) are not; are not 
D) are; are not 
E) are; may or may not be

Question 5

Speculators may use futures markets rather than spot markets because

Accepted Answer

A) transactions costs are lower in futures markets. 
B) futures markets provide leverage. 
C) spot markets are less efficient. 
D) futures markets are less efficient. 
E) transactions costs are lower in futures markets and futures markets provide leverage. 
A) transactions costs are lower in futures markets. 
B) futures markets provide leverage. 
C) spot markets are less efficient. 
D) futures markets are less efficient. 
E) transactions costs are lower in futures markets and futures markets provide leverage.

Question 6

The terms of futures contracts __________ standardized, and the terms of forward contracts __________ standardized.

Accepted Answer

A) are; are 
B) are not; are 
C) are; are not 
D) are not; are not 
E) are; may or may not be 
A) are; are 
B) are not; are 
C) are; are not 
D) are not; are not 
E) are; may or may not be

Question 7

A trader who has a __________ position in gold futures wants the price of gold to __________ in the future.

Accepted Answer

A) long; decrease 
B) short; decrease 
C) short; stay the same 
D) short; increase 
E) long; stay the same 
A) long; decrease 
B) short; decrease 
C) short; stay the same 
D) short; increase 
E) long; stay the same

Question 8

On April 1, you bought one S&P 500 Index futures contract at a futures price of 1,550.If on June 15 the futures price were 1,612, what would be your profit (loss) if you closed your position (without considering transactions costs)

Accepted Answer

A) $1,550 loss 
B) $15,550 loss 
C) $15,550 profit 
D) $1,550 profit 
A) $1,550 loss 
B) $15,550 loss 
C) $15,550 profit 
D) $1,550 profit

Question 9

You hold one long corn futures contract that expires in April.To close your position in corn futures before the delivery date you must

Accepted Answer

A) buy one May corn futures contract. 
B) buy two April corn futures contract. 
C) sell one April corn futures contract. 
D) sell one May corn futures contract. 
A) buy one May corn futures contract. 
B) buy two April corn futures contract. 
C) sell one April corn futures contract. 
D) sell one May corn futures contract.

Question 10

You purchased one oil future contract at $70 per barrel.What would be your profit (loss) at maturity if the oil spot price at that time is $73.12 per barrel Assume the contract size is 1,000 barrels and there are no transactions costs.

Accepted Answer

A) $3.12 profit 
B) $31.20 profit 
C) $3.12 loss 
D) $31.20 loss 
E) None of the options 
A) $3.12 profit 
B) $31.20 profit 
C) $3.12 loss 
D) $31.20 loss 
E) None of the options

Question 11

On January 1, the listed spot and futures prices of a Treasury bond were 93.8 and 93.13.You purchased $100,000 par value Treasury bonds and sold one Treasury bond futures contract.One month later, the listed spot price and futures prices were 94 and 94.09, respectively.If you were to liquidate your position, your profits would be

Accepted Answer

A) $125 loss. 
B) $125 profit. 
C) $12.50 loss. 
D) $1,250 loss. 
E) None of the options 
A) $125 loss. 
B) $125 profit. 
C) $12.50 loss. 
D) $1,250 loss. 
E) None of the options

Who guarantees that a futures contract will be fulfilled

Which of the following items is not specified in a futures contract I. The contract size II. The maximum acceptable price range during the life of the contract III. The acceptable grade of the commodity on which the contract is held IV. The market price at expiration V. The settlement price

If a trader holding a long position in oil futures fails to meet the obligations of a futures contract, the party that is hurt by the failure is

Futures contracts traded on an organized exchange, and forward contracts traded on an organized exchange.

Speculators may use futures markets rather than spot markets because

The terms of futures contracts standardized, and the terms of forward contracts standardized.

A trader who has a position in gold futures wants the price of gold to in the future.

On April 1, you bought one S&P 500 Index futures contract at a futures price of 1,550.If on June 15 the futures price were 1,612, what would be your profit (loss) if you closed your position (without considering transactions costs)

You hold one long corn futures contract that expires in April.To close your position in corn futures before the delivery date you must

You purchased one oil future contract at $70 per barrel.What would be your profit (loss) at maturity if the oil spot price at that time is $73.12 per barrel Assume the contract size is 1,000 barrels and there are no transactions costs.

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters

Exam 22: Futures Markets

Who guarantees that a futures contract will be fulfilled

Which of the following items is not specified in a futures contract I. The contract size II. The maximum acceptable price range during the life of the contract III. The acceptable grade of the commodity on which the contract is held IV. The market price at expiration V. The settlement price

If a trader holding a long position in oil futures fails to meet the obligations of a futures contract, the party that is hurt by the failure is

Futures contracts __________ traded on an organized exchange, and forward contracts __________ traded on an organized exchange.

Speculators may use futures markets rather than spot markets because

The terms of futures contracts __________ standardized, and the terms of forward contracts __________ standardized.

A trader who has a __________ position in gold futures wants the price of gold to __________ in the future.

On April 1, you bought one S&P 500 Index futures contract at a futures price of 1,550.If on June 15 the futures price were 1,612, what would be your profit (loss) if you closed your position (without considering transactions costs)

You hold one long corn futures contract that expires in April.To close your position in corn futures before the delivery date you must

You purchased one oil future contract at $70 per barrel.What would be your profit (loss) at maturity if the oil spot price at that time is $73.12 per barrel Assume the contract size is 1,000 barrels and there are no transactions costs.

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Optimal Risky Portfolios

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Options Markets: Introduction

Option Valuation

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters

Futures contracts traded on an organized exchange, and forward contracts traded on an organized exchange.

The terms of futures contracts standardized, and the terms of forward contracts standardized.

A trader who has a position in gold futures wants the price of gold to in the future.