1.If an individual anticipates the price of a stock falling, how would he go about shorting the stock to capture a profit? How does his short position create a liability?

2. What contract would two parties utilize, if they agreed to exchange cash flows? How might this transaction proceed?

3.What are daily price limits and how are they used by future exchanges?

4.Explain the difference among the three means of terminating a future contract: an offeseting trade, cash settlement and delivery.

5.Explain three operational advantages offered by derivatives markets?

6.Why do efficient Market benefits society?

7.What contract would two parties utilize, if they agreed to exchange cash flows? How might this transaction proceed?