Hi, please help me with the following multiple questions: Thanks,

If the initial margin is $5,000, the maintenance margin is $3,500 and your balance is $3,100, how much must you deposit? (Points : 3.3) $1,500 $400 $1,900 0 none of the above

Question 2. 2. The number of futures contracts outstanding is called the (Points : 3.3)

reportable position minimum volume open interest spread position none of the above

Question 3. 3. Most futures contracts are closed by (Points : 3.3)

delivery offset exercise default none of the above

Question 4. 4. Most forward contracts are closed by (Points : 3.3)

delivery offset exercise default none of the above

Question 5. 5. Which of the following is not a forward contract? (Points : 3.3)

a long-term employment contract at a fixed salary an automobile lease non-cancelable for three years a rain check a signed contract to buy a house in six months none of the above

Question 6. 6. Which of the following duties is not performed by the clearinghouse? (Points : 3.3)

holding margin deposits guaranteeing performance of buyer and writer maintaining records of transactions lending money to meet margin requirements none of the above

Question 7. 7. The trading procedure on the floor of the futures exchange is referred to as (Points : 3.3)

against actuals open interest open outcry index participation none of the above

Question 8. 8. Futures prices differ from spot prices by which one of the following factors? (Points : 3.3)

the systematic risk the cost of carry the spread the risk premium none of the above

Question 9. 9. Suppose there is a risk premium of $0.50. The spot price is $20 and the futures price is $22. What is the expected spot price at expiration? (Points : 3.3)

$21.50 $22.50 $20.50 $24.50 none of the above

Question 10. 10. Suppose it is currently July. The September futures price is $60 and the December futures price is $68. What does the spread of $8 represent? (Points : 3.3)

the cost of carry from July to September the expected risk premium from July to September the cost of carry from September to December the expected risk premium from September to December none of the above

Question 11. 11. The spot price plus the cost of carry equals (Points : 3.3)

the convenience yield the expected future spot price the risk premium the futures price none of the above

Question 12. 12. Margin in a futures transaction differs from margin in a stock transaction because (Points : 3.3)

stock transactions are much smaller delivery occurs immediately in a stock transaction no money is borrowed in a futures transaction futures are much more volatile none of the above

Question 13. 13.

Individuals engaging in this type of trading strategy are characterized by their attempt to profit from guessing the direction of the market

(Points : 3.3)

hedgers spreaders speculators arbitraguers none of the above

Question 14. 14. Despite the fact that forward contracts carry more credit risk than futures contracts, forward contracts offer what primary advantage over futures contracts? (Points : 3.3)

the over-the-counter forward market is a highly regulated market forward contracts prevent the writer from assuming the credit risk of the buyer terms and conditions are tailored to the specific needs of the two parties involved transaction information between the two parties involved in the forward contract is readily available to the public conditions of the forward contract, such as delivery date and location, cannot be altered

Question 15. 15. This individual takes a futures contract position that is opposite to the position in the spot market in order to reduce risk (Points : 3.3)

speculator hedger risk aversion maximizer spreader arbitraguer

Question 16. 16. Which of the following correctly orders the process of daily settlement? (Points : 3.3)

clearinghouse officials establish a settlement price; each account is marked to market; accounts of those holding long/short positions are credited/debited appropriately; differences between todays settlement price and the previous days settlement price are determined clearinghouse officials establish a settlement price; each account is marked to market; differences between todays settlement price and the previous days settlement price are determined; accounts of those holding long/short positions are credited/debited appropriately differences between todays settlement price and the previous days settlement price are determined; accounts are marked to market; clearinghouse officials establish a settlement price; accounts of those holding long/short positions are credited/debited appropriately clearinghouse officials establish a settlement price; differences between todays settlement price and the previous days settlement price are determined; accounts of those holding long/short positions are credited/debited appropriately; each account is marked to market differences between todays settlement price and the previous days settlement price are determined; accounts are marked to market; clearinghouse officials establish a settlement price; accounts of those holding long/short positions are credited/debited appropriately

Question 17. 17. Why is the initial value of a futures contract zero? (Points : 3.3)

the futures is immediately marked-to-market you do not pay anything for it the basis will converge to zero the expected profit is zero because the futures price and spot price will be the same at expiration

Question 18. 18. The value of a long position in a forward contract at expiration is (Points : 3.3)

the spot price plus the original forward price the spot price minus the original forward price the original forward price discounted to expiration the spot price minus the original forward price discounted to expiration

Question 19. 19. The value of a futures contract immediately after being marked to market is (Points : 3.3)

numerically equal to the daily settlement amount the spot price plus the original forward price equal to the amount by which the price changed since the contract was opened simply zero none of the above

Question 20. 20. Under uncertainty and risk aversion, todays spot price equals (Points : 3.3)

the expected future spot price, minus the storage costs, minus the interest forgone, minus the risk premium the expected future spot price, minus the storage costs, minus the interest forgone, plus the risk premium the expected future spot price, minus the storage costs, minus the risk premium future spot price minus the cost of storage none of the above

Question 21. 21. The implied repo rate is similar to the (Points : 3.3)

internal rate of return cost of hedging yield on the futures contract all of the above none of the above

Question 22. 22. If a firm is planning to borrow money in the future, the rate it is trying to lock in is (Points : 3.3)

the current forward rate the current spot rate the difference between the spot rate and the forward rate the forward rate at the termination of the hedge none of the above

Question 23. 23. You are trying to see if there is an arbitrage opportunity. Current US interest rate is 6.6%. The spot rate for US/EUR is 0.8 while the forward rate for a year is 0.82. If the current interest rate in Germany is 4%. What should be done? (Points : 3.3)

Borrow in US and convert money to Euros, invest in Germany and after a year convert back to US dollars. Borrow in Germany and convert to US dollars at spot rate, invest in US and after a year convert back to Euros at forward rate Borrow Euros in Germany and invest in Germany, wait for a year and then convert to dollars using the forward rate. Borrow dollars in US, invest in US, wait for a year and convert to Euros at Forward rate and invest in Germany There is no arbitrage with these numbers, so you must invest in your native nation

Question 24. 24. A transaction in which an investor holds a position in the spot market and sells a futures contract or writes a call is (Points : 3.3)

a gamble a speculative position a hedge a risk-free transaction none of the above

Question 25. 25. Which of the following are advantages of derivatives? (Points : 3.3)

lower transaction costs than securities and commodities make spot prices stay closer to their true values help control risk all of the above 2 and 3 only

Question 26. 26. A forward contract has which of the following characteristics? (Points : 3.3)

has a buyer and a seller trades on an organized exchange has a daily settlement gives the right but not the obligation to buy all of the above

Question 27. 27. A market in which the price equals the intrinsic value (Points : 3.3)

has a risk-free component will be profitable is organized is efficient all of the above

Question 28. 28. Arbitrage is a transaction designed to capture profits resulting from market efficiency (Points : 3.3)

True False

Question 29. 29. Determine the annualized implied repo rate on a Treasury bond spread in which the March is bought at 52.7 and the June is sold at 53.5. The March CF is 1.1 and the June CF is 1.14. The accrued interest as of March 1 is 1.1 and the accrued interest as of June 1 is 1.3. (due to calculator precision, pick the closest answer) (Points : 3.3)

23% 2.3% 13% 3.5% 4.5%

Question 30. 30. The difference between UCIRP and CIRP is that UCIRP includes expected future spot rate while CIRP includes future rate. (Points : 4.3)

True False