QUESTION 5

The futures price of a commodity such as wheat is $2.50 a bushel. Futures contracts are for 10,000 bushels, and the margin requirement is $2,500 a contract. The maintenance market requirement is $1,000. A speculator expects the price of the commodity to rise and enters into a contract to buy wheat. How much must the speculator initially remit?

		a. The initial margin requirement: $2,500
		b. The initial margin requirement: $2,000
		c. The i nitial margin requirements is $1,000
		d. None of the above

QUESTION 6

The futures price of a commodity such as wheat is $2.50 a bushel. Futures contracts are for 10,000 bushels, and the margin requirement is $2,500 a contract. The maintenance market requirement is $1,000. A speculator expects the price of the commodity to rise and enters into a contract to buy wheat. If the futures price rises to $2.60, what is the profit and return on the position?

		a. 66.7%
		a. 23.7%
		c. 33.3%
		d. 10%

QUESTION 7

The intrinsic value of an option sets

		a. the minimum price of an option
		b. the maximum price of an option
		c. neither an option's minimum nor its maximum price
		d. both the maximum and the minimum price of an option