Explain the difference between a call option and a long position in a futures contract.

What is the difference between the futures price and the value of the futures contract?

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The price level you choose for price protection on a call option is referred to as: A. The strike price B. The option premium C. The time value D. The intrinsic value

Write short note on a futures contract.

Describe how the price of a futures contract is established in theory, with reference to arbitrage.

A contract requiring a specified future monetary payment at a specified future point in time in exchange for the delivery of a specific asset is called a: *A. nonconvertible option.B. hedge.C. long contract.D. swap.

When entering into a futures contract, the purchaser pays the contract premium to the seller. True False

(a) Outline in detail what is meant by a forward and futures contract. Evaluate the relationship between futures price and spot price, and give reasons to justify the necessity for exchange margin accounts.   (b) Explain the concept of cost of carry model and its role in the pricing of financial futures contracts.