Suppose that we enter a short position in forward on date 0. Because we pay nothing to start the position, the contract value should be zero on date t(>0). (a) True (b) False Consider a food company that expects to buy corns two years later. As long as the company uses futures on corns, it can eliminate all risks in the payments. (a) True (b) False The spot price of an underlying asset is positively correlated with the risk-free rate. Consider futures and forward contracts on this asset for date-T delivery. Suppose that the contract prices (forward and futures prices) are the same on date 0. Then, the cumulative gain on the futures that we measure on date T tends to be larger than the forward payoff. (a) True (b) False According to the term structure today, the implied forward rate between year 2 and 3 is ro(2, 3). Two years later, the spot rate r2(2,3) should be the same as the forward rate ro(2,3). Otherwise, an arbitrage exists. (a) True (b) False The open interest of a certain futures contract is 700 at the end of day t. Next day, 50 contracts are traded for the future. Then, the futures' open interest at the end of day t+1 can be as low as 650. (a) True (b) False