6. For a given Forward contract, the Delivery Price is determined:

a. At the beginning of the Forward contract (now)

b. One year after the Forward contract begins (later)

c. One month after the Forward contract begins (later)

d. At the delivery date of the Forward contract (later)

7. "Zero-Initial Value" means that:

a. Forward contract has "zero value" when it is created

b. Forward contract has "zero default risk" when it is traded

c. Forward contract has "zero transaction cost" when it is traded

d. All of the above

8. Which of the following is True?

a. Futures and Forward contracts are traded in the same market

b. Futures and Forward are zero-sum games

c. Futures and Forward are not binding agreements

d. All of the above

9. As discussed in Class #2, examples of future exchanges include:

I) Chicago Board Options Exchange (CBOE); II) Korea Exchange; III) Eurex Exchange;

IV) Chicago Mercantile Exchange (CME)

(hint: review Class #2 presentation, p. 16)

a. I and IV only

b. III and IV only

c. I, II, III, and IV

d. I and II only

10. The Onion Futures Act of 1958 banned Onion Futures due to:

a. Tears caused by onions

b. Market manipulation

c. Lack of interests in buying or selling onions

d. Windy weather in Chicago

11. As learned in Class #2, which of the following is most likely to be successful in

futures markets?

a. Futures on Onions

b. Futures on S&P Index

c. Futures on Diamonds

d. All of the above

12. Which of the following is True?

a. Futures and options are identical derivatives contracts

b. Forward and options are identical derivatives contracts

c. Forward contracts provides the holder the right but not the obligation to buy or sell at a

certain price in the future

d. None of the above