1. Derivative Contracts: What are the major differences between a futures contract and an options contract? Do not simply define them. 2. What does a Clearinghouse in the derivatives markets do? 3. Spot Prices: Look up the current level of the S&P 500 index, the price of gold, silver, corn and Euros. Indicate the units (e.g., ounces, gallons, bushels) and the date of your answers. 4. Futures Pricing: How does the price of a financial futures contract change as the market price of the security it represents changes? 5. Treasury Bond Futures: Would speculators buy or sell Treasury bond futures contracts if they expect interest rates to increase? How will companies who worry that interest rates might rise in a few months (when they are planning to issue new bonds) hedge against a rise in market interest rates? 6. Selling Futures: How do sellers of financial futures contracts offset their position? 7. Long versus Short Hedge: Explain, in your own words, the difference between a long hedge and a short hedge used by financial institutions. When is a long hedge more appropriate than a short hedge? 8. Stock Index Futures: Describe, in your own words, stock index futures. How can they be used by a financial institution that is anticipating a jump in stock prices but does not yet have sufficient funds to purchase large amounts of stock? 9. How does a financial institution hedge with stock index futures or stock index options? Explain why stock index futures and options may reflect investor expectations about the market more quickly than stock prices. 10. Selling Short Index Futures: Why would a pension fund or an insurance company even consider selling stock index futures