Most futures contracts are closed by a. Delivery of the underlying asset. b. Placing an offsetting order. c. Exercise of the embodied option. d. Default. e. none of the above.
Most futures contracts are closed by a. Delivery of the underlying asset. b. Placing an offsetting order. c. Exercise of the embodied option. d. Default. e. none of the above.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:8) Most futures contracts are closed by
a. Delivery of the underlying asset.
b. Placing an offsetting order.
c. Exercise of the embodied option.
d. Default.
e. none of the above.
9) Which of the following is not a forward contract?
a. a long-term employment contract at a fixed salary.
b. an automobile lease non-cancellable for three years.
c. a down payment to rent an apartment.
d. a signed contract to buy a house in six months.
e. none of the above.
10) In a futures marking-to-market, when the trader receives a margin call, the amount
he must deposit is called:
a. the initial margin.
b. the maintenance margin.
c. the variation margin.
d. the margin balance.
e. none of the above.
11) If the initial margin of a futures contract is $5,000 and the maintenance margin is
$3,500, how much must you deposit at the start of the contract?
a. $5,000
b. $3,500
c. $8,500
d. $0.000
e. none of the above.
12) If the initial margin is $5,000, the maintenance margin is $2,500 and your margin
balance is $2,000, how much must you deposit when receiving a margin call?
a. $2,500
b. $3,000
c. $2,000
d. $0.00
e. none of the above.
00.8
13) A transaction that exploits the differences in the theoretical and actual values of a
foreign currency forward or futures contract is called:
a. covered interest arbitrage.
b. triangular arbitrage.
c. a conversion.
d. interest-rate parity.
e. none of the above.
14) Futures prices differ from spot prices by which one of the following factors?
a. the systematic risk.
b. the cost of carry.
c. the spread.
d. the risk premium.
e. none of the above.
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