TB Chapter 08

Topics: Futures contract, Commodity Futures Trading Commission, Chicago Board of Trade Pages: 7 (1890 words) Published: April 23, 2015
CHAPTER 8: STRUCTURE OF FORWARD AND FUTURES MARKETS

MULTIPLE CHOICE TEST QUESTIONS

1.Which of the following is a false statement related to options on futures?
a.options on futures are also known as futures options
b.options on futures are also known as options on the underlying instrument
c.options on futures is a derivative on a derivative
d.options on futures are also known as commodity options
e.all of the above statements are true related to options on futures

2.Which of the following contract terms is not set by the futures exchange?
a.the dates on which delivery can occur
b.the expiration months
c.the deliverable commodities
d.the size of the contract
e.the price

3.Which of the following organizations has the ultimate regulatory authority in the futures industry?
a.National Futures Association
b.Commodity Futures Trading Commission
c.Commodity Exchange Authority
d.Securities and Exchange Commission
e.none of the above

4.Margin in a futures transaction differs from margin in a stock transaction because
a.stock transactions are much smaller
b.delivery occurs immediately in a stock transaction
c.no money is borrowed in a futures transaction
d.futures are much more volatile
e.none of the above

5.If the initial margin is $5,000, the maintenance margin is $3,500 and your balance is $4,000, how much must you deposit?
a.$6,000
b.$1,500
c.$9,000
d.nothing
e.none of the above

6.If the initial margin is $5,000, the maintenance margin is $3,500 and your balance is $3,100, how much must you deposit?
a.$1,500
b.$400
c.$1,900
d.0
e.none of the above

7.The number of long or short futures positions outstanding is called the
a.reportable position
b.minimum volume
c.open interest
d.spread position
e.none of the above

8.Most futures contracts are closed by
a.delivery
b.offset
c.exercise
d.default
e. none of the above

9.Most forward contracts are closed by
a.delivery
b.offset
c.exercise
d.default
e.none of the above

10.Which of the following is not a forward contract?
a.a long-term employment contract at a fixed salary
b.an automobile lease non-cancelable for three years
c.a rain check
d.a signed contract to buy a house in six months
e.none of the above

11.Where did the U.S. futures market originate?
a.Chicago
b.Kansas
c.New York
d.Minneapolis
e. none of the above

12. Which of the following is a trader on the floor of the futures exchange? a. introducing broker
b. commission broker
c. commodity trading advisor
d. commodity pool operator
e. none of the above

13.Variation margin is which of the following?
a.the difference in margin between hedger and speculator
b.margin differences according to trading style
c.margin deposited as a result of marking-to-market
d.margin set by the variability of a futures price
e.none of the above

14.Which of the following is the most actively traded U.S. futures contract?
a.S&P 500 Index
b.crude oil
c.Treasury bonds
d.Wheat
e.none of the above
15.Which of the following duties is not performed by the clearinghouse?
a.holding margin deposits
b.guaranteeing performance of buyer and writer
c.maintaining records of transactions
d.lending money to meet margin requirements
e.none of the above

16.What are circuit breakers?
a.rules that stop trading when futures are about to expire
b.a system that shuts down the exchange computer during periods of abnormal volume
c.limits on the number of contracts that can be traded on high volume days
d.rules that limit the number of contracts a speculator can hold
e.none of the above

17.One of the first automated trading systems that matched bids and offers implemented at the CME is called
a.COMEX
b.GLOBEX
c.LIFFE
d.CFTC
e.none of the above

18.Which of the following is...
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