(20 marks) Section A: Multiple Choice Questions 1) Which of the following statements about futures contracts is correct? a) Most futures contracts are held to maturity. b) Future contract holders will either buy or sel an opposite contract on or before expiry date to close-out the contract c) The majority of commodity futures are held to maturity. d) Financial futures contracts are delivered at maturity whereas all commodity futures are closed-out. 2) An orange grower who is concerned that the price of oranges will fall before harvest and sale can: a) buy an orange futures contract today. b) sell an orange futures contract today. c) carry out in the futures market the opposite of what he plans to do in the physical market when his crop is ready for sale. d) take a long position in orange futures. 3) When an oil company suffers severe damage to one of its oil drilling platforms, this is an example of: a) technological risk. b) financial risk. c) business risk. d) operational risk. 4) The policy where a central bank influences the level of short-term interest rates in order to affect inflation is referred to as: a) fiscal policy b) economic policy. c) monetary policy d) inflation rate policy. 5) If a government's income from tax receipts exceeds its expenditure, the government is running a: a) deficit, and is a net borrower of funds. b) surplus, and is a net borrower of funds. c) deficit, and is a net saver of funds. d) surplus, and is a net saver of funds. 6) When the Australian government faces month-by-month mismatches between inflow of funds and cash outflows it may issue: a) Treasury bonds. b) Treasury bills. c) Treasury notes. d) Treasury paper