Exam 17: Futures Contracts

Forward Rate Agreements (FRAs)are traded on the Australian Securities Exchange.

'Marking to market' is a process of the clearinghouse whereby:

The cost of holding a commodity from one period to another is known as:

Which of the following statements is true for a 10-year bond future contract?

The financial controller of Nointerest Ltd has planned that the company borrow using a 90-day bank bill facility with face value of $500 000 in four weeks.Interest rates on 90-day bank bills are currently 12% p.a.As a protection against possible interest rate increases,she has entered into a futures contract by selling one bank bill futures contract at a price of $88.50.After the four-week period,she reverses the futures position at $86.50 and issues a bank bill at a rate of 14% p.a.Calculate the net dollar shortfall/gain.

Over hedging is the equivalent of speculating.

Individuals and companies who enter into contracts in order to profit from correctly anticipating price movements are known as:

Day traders are prepared to trade as they see fit during a trading day,but regard an overnight position as _____________.

A hedger can be described as someone who enters into a futures contract:

A demand for extra funds to be deposited into a trader's account is called a:

Given the following information,calculate the expected arbitrage profit or loss from buying an ounce of gold today for $553 and selling a futures contract that matures in six months' time at a price of $570.Assume interest rates are 10% p.a. ,insurance costs are $20,the risk factor is 5 per cent on the cost of gold,and projected gold production over the next 12 months is 5000 ounces.

If the spot price and futures price on a gold contract are $553 and $555,respectively,then theoretically the carrying cost should be equal to:

The first futures contract in Australia was on:

Buying a June bank bill futures contract and simultaneously selling a March bond futures contract is:

To prevent arbitrage,the futures price must be:

A speculator can be described as someone who enters into a futures contract:

The SPI 200 futures contract is only used for speculation.

On 6 January 2002,the All Ordinaries Index closed at 3435 points and the June 2002 SPI 200 futures was priced at 3457 points.A speculator believes that share prices are likely to fall and so decides to sell June 2002 SPI 200 futures.One week later,when the All Ordinaries Index falls to 3417 points and the June 2002 SPI 200 futures falls to 3436 points,the speculator decides to reverse her position.How much profit/loss does the speculator make?

Calculate how much a trader,who enters into a 90-day bank bill futures contract on 20 June with a reported price of $94.00,will need to pay on settlement date (30 June)if the face value of the underlying bill is $500 000.

A margin call refers to: