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An individual buyer and seller of lumber may enter into a customizable sales transaction that will occur nine months from today. This type of contract

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  1. An individual buyer and seller of lumber may enter into a customizable sales transaction that will occur nine months from today. This type of contract is typically called a:
1. An individual buyer and seller of lumber may enter into a customizable sales transaction that will occur nine months from today. This type of contract is typically called a: a. Buy/Sell agreement b. Forward contract C. Lumber contract d. Sales contract 2. Liquidity can be defined as the ability to transact quickly and efficiently without a substantial impact to the price of the underlying asset. Which of the following transactions is the LEAST liquid? a. Buying or selling an exchange-traded fund (ETF) b. Buying or selling an E-mini S&P 500 futures contract C. Buying or selling a car d. Buying or selling a house 3. Which of the following best describes a futures contract? a. The right to buy or sell a specified quantity of a particular asset during a given period at the spot price b. A standardized obligation to buy or sell a specified quantity of a particular asset during a given period for a given price An option to buy or sell a specified quantity of a particular asset during a given period for a given price d. A standardized obligation to buy or sell a particular asset in a specified quality at a future time, place, and unit price C. 4. A futures contract price is adjusted daily during the term of the contract, up or down, depending on current market conditions. This adjustment is called: a. SEC requirements for futures contracts b. Mark-to-market C. The "cheapest to deliver" option on a futures contract d. Initial margin requirements changing on a daily basis 5. A corn farmer who wants to hedge the price of corn should enter into what type of contract? a. Buy a corn futures contract b. Sell a corn futures contract C. Long position in an option index d. Short position in an option index

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