FINA 350 Final: forwards and futures

A long contract requires that the investor a. sell securities in the future. b. buy securities in the future. c. hedge in the future. d. close out his position in the future

B

A short contract requires that the investor a. sell securities in the future b. buy securities in the future c. hedge in the future d. close out his position in the future

A

Futures contracts are regularly traded on the a. Chicago Board of Trade b. New York Stock Exchange c. American Stock Exchange d. Chicago Board Options Exchange

A

If you sell a short contract on financial futures you hope interest rates will a. rise b. fall c. not change d. fluctuate

A

The agency responsible for regulation of the futures exchanges and trading in financial futures is the a. commodity futures trading commision b. securities and exchange commision c. federal trade commision d. futures exchange commision.

A

The number of contracts oustanding in a particular financial future is the ____ a. demand coefficient b. open interest c. index level d. outstanding balance

B

The seller in a futures contract is said to have a a. long position b. short position c. buying position d. selling position

B

Which of the following is not true of a futures contract? a. standardized agreement b. set price to be bought or sold in the future. c. option to exercise the contract d. specified quantity of a financial asset to be bought or sold in the future.

C

Financial Futures are regularly traded on all of the following except the a. chicago board of trade b. CME c. New York Futures Exchange d. Chicago Commodity Markets Board

D

The advantage of forward contracts over future contracts is that forward contracts are a. standardized b. have lower default risk c. are more liquid d. are more flexible e. all of the above g. a and b only h. b and d only

D

By selling short a futures contract of $100,000 at a price of 115, you are agreeing to deliver _____ face value securities for ______. a. $100,000, 115,000 b. 115,000, 100,000 c.100,000, 100,000 d. 115,000: 115,000

a

If a trader buys a financial futures conract and interest rates rise, the trader will: a.lose money b. make a gain c. break even

a

A contract that requries the investor sell secrities on a future date is called a a. short contract b. long contract c. hedge d. micro hedge

a.

At maturity of a future contract, the spot price and futures price must be approximately the same because of a. marking to market b. the convergence property c. the open interest d. the triple witching hour

b

By selling short a futures contract of 100,000 at a price of 96, you are aggreing to deliver ____ face value securities for _____. a. 100,000 ; 104,167 b. 96,000 ; 100,000 c. 100,000 ; 96,000 d. 100,000 ; 100,000

b

If you buy a long contract on financial futures, you hope interest rates will ____ a. rise b. fall c. not change d. fluctuate

b

If you sell a short futures contract, you hope that bond prices will ____ a. rise b. fall c. not change d. fluctuate

b

The _____ is really a performance bond that guarantees that the buyer or seller of a futures contract will fulfill the commitment. a. clarninghouse b margin c. future price d. spot price

b

The daily change in the value due to the marking to market process is known as the: a. maintenance margin. b. variation margin. c. market margin d. initial margin e. marked margin

b

Which is not a problem of forward contracts? a. a lack of liquidity b. a lack of flexibility c. the difficiult of finding a counterparty d. default risk

b

A contract that requires the investor to buy securities on a future date is called a a. short contract b. long contract c. hedge d. cross

b.

The advantage of forward contracts over futures contracts is that forward contracts a. are standardized b. have lower default risk c. more flexible d. both a and b

c

The elimination of riskless profit oppurtunities in the futures market is referred to as a. speculation b. hedging c. arbitrage d. open interest e. mark to market

c

The futures markets have grown rapidly in recent years because a. interest rate volatility has increased. b. financial managers are more risk averse. c. both a and b d. neither a or b

c

The value of a basis point for 90 day eurodollar time deposit futures contract is a. 10 b. 100 c. 25 d. 250 e. 500

c

Which of the following is unique to the cash market, as opposed to the futures market? a. organized exhanges are used in the cash market b. contracts are not standardized in the cash market c. pricing and delivery occur at the same time in the cash market d. buyers are not insured against losses in the cash market

c

Financial futures are: a. a commitment between two parties to trade a financial insturment at a certain rate at a specified time in the future. b. a call option on a standridized asset at a certain price at a specified time in the ftre. c. a put option on a stanrdized asset at a certain price at a specified time in the future. d. a commitment between two parties on the price of a standardized financial asset with the final settlement specified time in the future.

d

Futures differ from forwards because they are a. used to hedge portfolios b. used to hedge individual securities c. usedi n both financial and foregin exchange markets. d. marked to market daily

d

Futures differ from forwards because they are a. used to hedge portfolios b. used to hedge individual securities c. usedi n both financial and foregin exchange markets. d. standardized contracts.

d

Futures markets have grown rapidly because futures contracts a. are standardized b. have lower default risk c. more liquid d. all of the above

d

The advantage of forward contracts over futures contracts is that forward contracts a. are standardized b. have lower default risk c. more liquid d. none

d

The basis on a futures contract is defined as: a. the cash price minus the forward price b. the forward price minus the cash price. c. the futures price minus the cash price d. the cash price minus the futures price.

d

The purpose of the commodity futures trading commission is to do all of the following except a. oversee futures trading b. see that prices are not maniplated c. approve proposed futures contracts d. establish minimum prices for futures contract

d

To buy a futures contract, one must post a(n): a. maintenance margin b. variation margin c. market margin d. initial margin e. marked margin

d

Which of the following features of treasury bond futures contracts were not designed to increase liquidity? a. standardized contracts b. traded up until maturity c. not tied to one specific type of bond. d. can be closed with offsetting trade

d

Which of the following features of treasury bond futures contracts were not designed to increase liquidity? a. standardized contracts b. traded up until maturity c. not tied to one specific type of bond. d. marked to market daily

d

A trader buys a 90 day eurodollar futures contract at 95.25. The next day, interest rates fall 4.5%. Which of the following is true? Assume that the initial and maintenance margins are $5,000. a. the trader whold have to deposit an additional $62,500 into her account b. the trader would have to deoposit an additional $2,500 into her account. c. the trader would have to deposit an additional $625 into her account. d. the trader cold withdraw $2,500 from her margin account. e. the trader could withdraw $625 from her margin account

e

Assume the following information is given: $1 million (face value), thirteen week t bill futures contract, and the final index price is 95.00. The settlement price for this contract is a. $987.361 b. $987,534 c. $1,012,465 d. $1,012,639 e. none of the above

e

When you own the underlying security, your spot position is _____ a. flat b. long c. short d. is also known as your cash position e. b and d

e