1. Which best describes an intra-market futures spread?

A.

short gold November contract and simultaneously long silver December contract.

B.

long gold November contract and simultaneously short gold December contract.

C.

long gold November contract and simultaneously short silver November contract.

D.

long gold November contract and simultaneously long gold December contract.

2.

When an arbitrage opportunity exists, what happens in the market?

A.

The combined actions of all arbitrageurs force the price to diverge.

B.

The combined actions of all arbitrageurs force the prices to converge.

C.

The combined actions of all arbitrageurs result in sustained profits to all.

D.

The combined actions of arbitrageurs result in a locked-limit situation.

3.

Which of the following statements is an advantage of an exchange trading system?

A.

Terms are not standardized.

B.

Trading is decentralized.

C.

Participants have flexibility to negotiate.

D.

Trades are made in such a way to reduce credit risk.

4.

If a dividend payment is announced between the forwards valuation and expiration dates, assuming the news announcement does not change the current underlying price, the forward value will most likely:

A.

increase.

B.

be the same.

C.

decrease.

D.

be zero.