4.

Comparing "forward" and "futures" exchange contracts, we can say that

A.

they are both "marked-to-market" daily.

B.

their major difference is in the way the underlying asset is priced for future purchase or sale: futures settle daily and forwards settle at maturity.

C.

a futures contract is negotiated by open outcry between floor brokers or traders and is traded on organized exchanges, while forward contract is tailor-made by an international bank for its clients and is traded OTC.

D.

both b and c

5.

Comparing "forward" and "futures" exchange contracts, we can say that

A.

delivery of the underlying asset is seldom made in futures contracts.

B.

delivery of the underlying asset is usually made in forward contracts.

C.

delivery of the underlying asset is seldom made in either contractthey are typically cash settled at maturity.

D.

both a and b

E.

both a and c

6.

In which market does a clearinghouse serve as a third party to all transactions?

A.

Futures

B.

Forwards

C.

Swaps

D.

None of the above

7.

In the event of a default on one side of a futures trade,

A.

the clearing member stands in for the defaulting party.

B.

the clearing member will seek restitution for the defaulting party.

C.

if the default is on the short side, a randomly selected long contract will not get paid. That party will then have standing to initiate a civil suit against the defaulting short.

D.

both a and b

8.

Yesterday, you entered into a futures contract to buy 62,500 at $1.50 per . Your initial performance bond is $1,500 and your maintenance level is $500. At what settle price will you get a demand for additional funds to be posted?

A.

$1.5160 per .

B.

$1.208 per .

C.

$1.1920 per .

D.

$1.4840 per .