1. Which of the following not an advantage of hedging using futures contract?

Select one:

i. Convergence of futures and cash price

ii. Positions may be closed-out

iii. Forgo benefits of favourable movements

iv. Liquid and central market

v. . Leverage

2. Which of the following is/are TRUE concerning margin call?

Select one or more:

i. A margin call occurs when a margin account runs low on funds, usually because of a losing trade

ii. Margin call is also known as maintenance margin

iii. Brokers may force traders to sell assets, regardless of the market price, to meet the margin call if the trader doesn't deposit funds.

iv. Margin calls are demands for additional capital or securities to bring a margin account up to the minimum maintenance margin.

3. Assuming that you are an arbitrageur, which trading strategy should you undertake if the intrinsic price of the futures contract (F*) is GREATER than the market price of the futures contract (F)?

Select one:

a. Short hedge

b. Long hedge

c. sell underlying

d. Short arbitrage

e. sell futures

f. buy futures

g. Long arbitrage

h. buy underlying

4. Does LOWER futures market price (F) in comparison to futures intrinsic price (F*) indicate bullish or bearish market?

5. Suppose the intrinsic futures price is GREATER than market futures price. As a speculator, should you buy or sell futures contract?