A futures position that is equal, but opposite, the position in the underlying asset
Deposit of funds in a futures trading account dedicated to covering potential losses from an outstanding futures position
The minimum margin that must be supplied on a securities purchase
In futures trading accounts, the process whereby gains and losses on outstanding futures positions are recognized on a daily basis
QUESTION 22
1. You enter a long futures position on cocoa with a futures price of $2,250.00 per ton. Each futures contract is for 10 tons. On the expiration date the price of cocoa is $3,100. Based on this information, what was your profit or loss on this position?
Gain between $0 and $5,000
Gain between $5,000 and $10,000
Gain between $10,000 and $20,000
Lose between $0 and $5,000
Lose between $5,000 and $10,000
Lose between $10,000 and $20,000
QUESTION 23
1. What is the definition of marking to market?
A futures position that is equal, but opposite, the position in the underlying asset
Deposit of funds in a futures trading account dedicated to covering potential losses from an outstanding futures position
The minimum margin that must be supplied on a securities purchase
In futures trading accounts, the process whereby gains and losses on outstanding futures positions are recognized on a daily basis
QUESTION 24
1. Tickets to a sporting event were $160 per person six months ago. Now, the tickets are $260. Based on this information, what was the inflation rate of the tickets over the six months?
Less than 45%
Between 45% and 90%
Between 90% and 120%
More than 120%
QUESTION 25
1. What is the definition of full hedge?
A futures position that is equal, but opposite, the position in the underlying asset
Deposit of funds in a futures trading account dedicated to covering potential losses from an outstanding futures position
The minimum margin that must be supplied on a securities purchase
In futures trading accounts, the process whereby gains and losses on outstanding futures positions are recognized on a daily basis
QUESTION 26
1. Are the following statements true or false:
I. Carrying-charge market is the case where the futures price is greater than the cash price, i.e., the basis is negative
II. Inverted market is the case where the futures price is less than the cash price, i.e., the basis is positive
Statement I is true and statement II is false
Statement I is false and statement II is true
Both statements are true
Both statements are false
QUESTION 27
1. You buy 1 put option on Apple for $10 per share. The exercise price of the option is $250 and the option expires in 1 year. In one year the stock price is $250. What is your rate of return from the option contract?
Less than -50%
Between -50% and +50%
Between 50% and 150%
More than 150%
QUESTION 28
1. You enter a short futures position on cocoa with a futures price of $2,250.00 per ton. Each futures contract is for 10 tons. On the expiration date the price of cocoa is $3,100. Based on this information, what was your profit or loss on this position?
Gain between $0 and $5,000
Gain between $5,000 and $10,000
Gain between $10,000 and $20,000
Lose between $0 and $5,000
Lose between $5,000 and $10,000
Lose between $10,000 and $20,000
QUESTION 29
1. Currently, the spot price of a non-dividend paying security is $90.00, the futures price is $100, the expiration date is in one period, and the risk-free rate is 1% per period. Is there an arbitrage opportunity?
No, there is not an arbitrage opportunity.
Yes, there is an arbitrage opportunity.
QUESTION 30
1. Currently, the spot price of a dividend paying security is $90.00, the futures price is $100, the expiration date is in one period, and the risk-free rate is 1% per period. This security pays a dividend of $5 in one period. An investor sells the security today, investing the proceeds in the risk-free asset, and buying a futures contract. Does this sequence of actions yield a negative or positive cash flow in one period?
This sequence of actions yields a negative cash flow.
This sequence of actions yields a positive cash flow.