Exam 22: Futures Markets

You purchased one silver future contract at $3 per ounce. What would be your profit (loss) at maturity if the silver spot price at that time is $4.10 per ounce? Assume the contract size is 5,000 ounces and there are no transactions costs.

To exploit an expected decrease in interest rates, an investor would most likely

You sold one corn future contract at $2.29 per bushel. What would be your profit (loss) at maturity if the corn spot price at that time were $2.10 per bushel? Assume the contract size is 5,000 bushels and there are no transactions costs.

You purchased one corn future contract at $2.29 per bushel. What would be your profit (loss) at maturity if the corn spot price at that time were $2.10 per bushel? Assume the contract size is 5,000 bushels and there are no transactions costs.

Financial futures contracts are actively traded on the following indices except

Who guarantees that a futures contract will be fulfilled?

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

You sold 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.

A decrease in the basis will __________ a long hedger and __________ a short hedger.

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

Which one of the following statements regarding "basis" is true? I) The basis is the difference between the futures price and the spot price. II) The basis risk is borne by the hedger. III) A short hedger suffers losses when the basis decreases. IV) The basis increases when the futures price increases by more than the spot price.

If you determine that the DAX-30 Index futures is underpriced relative to the spot DAX-30 Index, you could make an arbitrage profit by

Given a stock index with a value of $1,100, an anticipated dividend of $27, and a risk-free rate of 3%, what should be the value of one futures contract on the index?

An increase in the basis will __________ a long hedger and __________ a short hedger.

You sold one silver future contract at $3 per ounce. What would be your profit (loss) at maturity if the silver spot price at that time is $4.10 per ounce? Assume the contract size is 5,000 ounces and there are no transactions costs.

You sold one soybean future contract at $5.13 per bushel. What would be your profit (loss) at maturity if the wheat spot price at that time were $5.26 per bushel? Assume the contract size is 5,000 bushels and there are no transactions costs.

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

Financial futures contracts are actively traded on the following indices except

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

Open interest includes