Exam 22: Futures Markets

Which of the following is false about profits from futures contracts? I) The person with the long position gets to decide whether to exercise the futures contract and will only do so if there is a profit to be made. II) It is possible for both the holder of the long position and the holder of the short position to earn a profit. III) The clearinghouse makes most of the profit. IV) The amount that the holder of the long position gains must equal the amount that the holder of the short position loses.

Metals and energy currency futures contracts are actively traded on

Agricultural futures contracts are actively traded on

Metals and energy currency futures contracts are actively traded on

The buyer of a futures contract is said to have a __________ position, and the seller of a futures contract is said to have a __________ position in futures.

The establishment of a futures market in a commodity should not have a major impact on spot prices because

On January 1, the listed spot and futures prices of a Treasury bond were 95.4 and 95.6. You sold $100,000 par value Treasury bonds and purchased one Treasury bond futures contract. One month later, the listed spot price and futures prices were 95 and 94.4, respectively. If you were to liquidate your position, your profits would be a

If you determine that the S&P 500 Index futures is overpriced relative to the spot S&P 500 Index, you could make an arbitrage profit by

Taxation of futures trading gains and losses

Agricultural futures contracts are actively traded on

A trader who has a __________ position in oil futures believes the price of oil will __________ in the future.

Financial futures contracts are actively traded on which of the following indices?

Investors who take long positions in futures agree to __________ of the commodity on the delivery date, and those who take the short positions agree to __________ of the commodity.

Which one of the following statements regarding "basis" is not true?

Given a stock index with a value of $1,500, an anticipated dividend of $62 and a risk-free rate of 5.75%, what should be the value of one futures contract on the index?

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

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

Contango

To hedge a long position in Treasury bonds, an investor would most likely

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 was 1,612, what would be your profit (loss) if you closed your position (without considering transactions costs)?