7. The differences between a typical forward contract and a futures contract include: a. The size of the futures contract depends on the particular transaction, whereas the size of the forward contract is standardized b. To enter into a forward contract, you must put down a margin, whereas in the futures contract you must come up with the full value of the contract up front c. Forward contracts look forward, whereas futures contracts look to the future d. The value of the Forward contract remains the same, whereas the value of the futures contract may vary from one day to the other e. The structure of the futures contract is customized, whereas the structure of the forward contract is standardized. 8. Betty, my (futures market) broker just called me and asked me to come up with an additional $5,000 to deposit in my account. This is referred to as: a. Blackmail b. Rude c. Margin elimination d. Margin call e. Futures call 9. The premium on a call Canadian dollar option decreases when: a. The Canadian dollar is expected to fluctuate wildly (against the US\$) b. The maturity of the option decreases c. The exercise price decreases from 1.3 (Canadian dollars to US dollar) to 1.1 d. The strike price of the option decreases e. Halifax becomes Canada's capital. 10. You buy an option to sell British pounds. You pay a premium of $0.20. The strike price is $1.35/. On maturity, the spot (market) rate is $1.25/. Which of the following statements is true? a. You bought a call option. b. I will exercise the option and generate a profit of $0.10 per . c. The option is Out-of-the-Money and profitable. d. The option is In-The-Money, but I suffer a loss of $0.10 per . e. The option is in-the-money, and I generate a profit of $0.10. 11. Hubcap-Mania has all the information you need to buy, sell, or play with hubcaps. The magazine lists the average price of a hubcap in the US as $5.50. The price in Italy is 5.00. If the Law of One Price holds, what is the exchange rate suggested by the Hubcap Index? a. 1.4=$1 b. $0.71=1 c. 0.91=$1 d. $1=1.4 e. 1=$5.50