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| 1 | |
Futures contracts are regulated by |
| | A) | the Commodity Futures Trading Corporation. |
| | B) | the Chicago Board of Trade. |
| | C) | the Chicago Mercantile Exchange. |
| | D) | the Federal Reserve. |
| | E) | the Securities and Exchange Commission. |
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| 2 | |
The terms of futures contracts such as the quality and quantity of the commodity and the delivery date are |
| | A) | specified by the buyers and sellers. |
| | B) | specified by the futures exchanges. |
| | C) | specified only by the buyers. |
| | D) | specified by brokers and dealers. |
| | E) | none of the above |
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| 3 | |
Financial futures contracts are actively traded on the following indices except |
| | A) | the Dow Jones Industrial Index. |
| | B) | the New York Stock Exchange Index. |
| | C) | the Nikkei Index. |
| | D) | the S&P 500 Index. |
| | E) | All of the above indices have actively traded futures contracts. |
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| 4 | |
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 |
| | A) | selling S&P 500 Index futures and buying all the stocks in the S&P 500. |
| | B) | selling short all the stocks in the S&P 500 and buying S&P Index futures. |
| | C) | selling all the stocks in the S&P 500 and buying call options on the S&P 500 index. |
| | D) | buying all the stocks in the S&P 500 and selling put options on the S&P 500 index. |
| | E) | none of the above |
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| 5 | |
The expectations hypothesis of futures pricing |
| | A) | is not a zero sum game. |
| | B) | states that the futures price equals the expected value of the future spot price of the asset. |
| | C) | is the simplest theory of futures pricing. |
| | D) | A and B |
| | E) | B and C |
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| 6 | |
Delivery of stock index futures |
| | A) | is never made. |
| | B) | requires delivery of 1 share of each stock in the index. |
| | C) | is made by a cash settlement based on the index value. |
| | D) | is made by delivering 100 shares of each stock in the index. |
| | E) | is made by delivering a value-weighted basket of stocks. |
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| 7 | |
Open interest includes |
| | A) | only long or short positions but not both. |
| | B) | the sum of short and long positions. |
| | C) | the sum of short, long and clearinghouse positions. |
| | D) | the sum of long or short positions and clearinghouse positions. |
| | E) | only contracts with a specified delivery date. |
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| 8 | |
Which of the following items is specified in a futures contract? - The maximum acceptable price range during the life of the contract
- The contract size
- The market price at expiration
- The acceptable grade of the commodity on which the contract is held
- The settlement price
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| | A) | I, II, and IV |
| | B) | I, III, and V |
| | C) | I and V |
| | D) | II, IV, and V |
| | E) | I, II, III, IV, and V |
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| 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 |
| | 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. |
| | E) | none of the above |
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| 10 | |
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. |
| | A) | $5.50 profit |
| | B) | $5,500 profit |
| | C) | $5.50 loss |
| | D) | $5,500 loss |
| | E) | none of the above |
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