-1 of 3ID:FRM.FU.TF.03.0010

Below are three diagrams that show the respective profits for three different types of traders: one speculator, one hedger and one arbitrager. Select which payoff diagram is likely to belong to each type of trader:

a)speculatorhedgerarbitrager

b)speculatorhedgerarbitrager

c)speculatorhedgerarbitrager

[2marks]-2 of 3ID:FRM.FU.SH.02.0010

It is possible to enter into a long or a short position on a futures exchange.

a)A long position is equivalent to abuysellorboughtsoldfutures contract and entitles the holder to:

buy an asset at a future time for a certain price sell an asset at a future time for a certain price

b)A short position is equivalent to abuysellorboughtsoldfutures contract and entitles the holder to:

buy an asset at a future time for a certain price sell an asset at a future time for a certain price

[1mark]-3 of 3ID:FRM.FU.TF.01A

The following table shows futures market data at the close of trading today.

Expiry

Bid

Ask

Open

High

Low

Settlement

March

54.05

54.10

54.20

54.85

53.52

54.07

June

54.07

54.12

54.23

54.25

53.52

54.10

September

56.08

56.13

54.50

57.85

55.25

56.10

December

55.25

55.30

56.10

56.56

54.21

55.27

For the June contract what price will be used to calculate the margin account balances?

54.10

54.12

57.85

54.50

- 1 of 3 ID: FRM.FU.TF.03.0010 Below are three diagrams that show the respective profits for three different types of traders: one speculator, one hedger and one arbitrager. Select which payoff diagram is likely to belong to each type of trader: a) speculatorhedgerarbitrage r b) speculatorhedgerarbitrage c) speculatorhedgerarbitrager r [2 marks]- 2 of 3 ID: FRM.FU.SH.02.0010 It is possible to enter into a long or a short position on a futures exchange. a)A long position is equivalent to a buysell or boughtsold futures contract and entitles the holder to: buy an asset at a future time for a certain price sell an asset at a future time for a certain price b)A short position is equivalent to a buysell or boughtsold futures contract and entitles the holder to: buy an asset at a future time for a certain price sell an asset at a future time for a certain price [1 mark]- 3 of 3 The following table shows futures market data at the close of trading today. Ope Settlemen High Low n t 54.0 54.1 54.8 53.5 March 54.20 54.07 5 0 5 2 54.0 54.1 54.2 53.5 June 54.23 54.10 7 2 5 2 Septembe 56.0 56.1 57.8 55.2 54.50 56.10 r 8 3 5 5 Expiry Bid Ask ID: FRM.FU.TF.01A December 55.2 55.3 56.5 54.2 56.10 55.27 5 0 6 1 For the June contract what price will be used to calculate the margin account balances? 54.10 54.12 57.85 54.50