1.

Dave is invested in a derivatives contract that has become very profitable. He is concerned that the other party to the contract will back out of the deal and not pay Dave the gains he is owed.

This risk is most commonly seen in which market?

• A.

  Futures

• B.

  Forward

• C.

  Options

• D.

  None of the above

2. Which of the following is/are an option for liquidating a futures position?

• A. Take an offsetting trade position prior to the delivery date
• B. Settle in cash on the delivery date
• C. Deliver the underlying asset on the delivery date
• D. (A) and (C) only
• E. All of the above

3. Who will gain if the price of an underlying asset falls?

• A. the seller of a futures contract
• B. the buyer of a put option
• C. the buyer of a call option
• D. the buyer of a futures contract
• E. both (A) and (B)