Question 1) Which of the following is true?

1) Which of the following is true?

A) Both forward and futures contracts are traded on exchanges

B) Forward contracts are traded on exchanges, but futures contracts are not

C) Futures contracts are traded on exchanges, but forward contracts are not

D) Neither futures contracts nor forward contracts are traded on exchanges

2) Which of the following is NOT true?

A) Futures contracts nearly always last longer than forward contracts

B) Futures contracts are standardized; forward contracts are not

C) Delivery or final cash settlement usually takes place with forward contracts; the same is not true of futures contracts

D) Forward contracts usually have one specified delivery date; futures contract often have a range of delivery dates

3) In the corn futures contract a number of different types of corn can be delivered (with price adjustments specified by the exchange) and there are a number of different delivery locations. Which of the following is true?

A) This flexibility tends increase the futures price

B) This flexibility tends decrease the futures price

C) This flexibility may increase and may decrease the futures price

D) This flexibility has no effect on the futures price

4) A company enters into a short futures contract to sell 50,000 units of a commodity for 70 cents per unit. The initial margin is $4,000 and the maintenance margin is $3,000. What is the futures price per unit above which there will be a margin call?

A) 78 cents

B) 76 cents

C) 74 cents

D) 72 cents

5) A company enters into a long futures contract to buy 1,000 units of a commodity for $60 per unit. The initial margin is $6,000 and the maintenance margin is $4,000. What futures price will allow $2,000 to be withdrawn from the margin account?

A) $58

B) $62

C) $64

D) $66

6) One futures contract is traded where both the long and short parties are closing out existing positions. What is the resultant change in the open interest?

A) No change

B) Decrease by one

C) Decrease by two

D) Increase by one

7) Who initiates delivery in a corn futures contract?

A) The party with the long position

B) The party with the short position

C) Either party

D) The exchange

8) You sell one December futures contracts when the futures price is $1,010 per unit. Each contract is on 100 units and the initial margin per contract that you provide is $2,000. The maintenance margin per contract is $1,500. During the next day the futures price rises to $1,012 per unit. What is the balance of your margin account at the end of the day?

A) $1,800

B) $3,300

C) $2,200

D) $3,700

9) A hedger takes a long position in a futures contract on a commodity on November 1, 2012 to hedge an exposure on March 1, 2013. The initial futures price is $60. On December 31, 2012 the futures price is $61. On March 1, 2013 it is $64. The contract is closed out on March 1, 2013. What gain is recognized in the accounting year January 1 to December 31, 2013? Each contract is on 1000 units of the commodity.

A) $0

B) $1,000

C) $3,000

D) $4,000

10) A speculator takes a long position in a futures contract on a commodity on November 1, 2012 to hedge an exposure on March 1, 2013. The initial futures price is $60. On December 31, 2012 the futures price is $61. On March 1, 2013 it is $64. The contract is closed out on March 1, 2013. What gain is recognized in the accounting year January 1 to December 31, 2013? Each contract is on 1000 units of the commodity.

A) $0

B) $1,000

C) $3,000

D) $4,000

11) The frequency with which margin accounts are adjusted for gains and losses is

A) Daily

B) Weekly

Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.