1. Futures contract on Water Price Index is an example of: (A) Derivatives contract based on a traded underlying asset (B) Spot contract based on a traded underlying asset (C) Derivatives contract based on a non-traded underlying index (D) None of the above Answer: 2. Speculators long a Futures contract on Water Price Index; this is a transaction in: (A) OTC derivatives market (B) Exchange-traded derivatives market (C) Spot market (D) None of the above Answer: 3. Which of following should be used by Water Supply Companies that want to hedge against an expected decrease in water prices in the future? (A) Long Futures on Water Price Index (B) Short Futures on Water Price Index (C) Long Forward on Water Price Index (D) None of the above