Reading 72: Futures Markets and Contracts - LOS b, (Part following, contract, class, black

cfaedu

1.The clearinghouse in a futures contract performs all but which of the following roles? The clearinghouse:

A)   guarantees traders against default from another party.

B)   guarantees the physical delivery of the underlying asset to the buyer of futures contracts.

C)   splits each trade and acts as a buyer to futures sellers and as a seller to futures buyers.

D)   allows traders to reverse their position without having to contact the other side of the position.

2.Initial margin deposits for futures accounts are:

A)   based on price volatility.

B)   set by the Federal Reserve for U.S. markets.

C)   typically 50% of the purchase price.

D)   usually larger for the short position.

3.A similarity of margin accounts for both equities and futures is that for both:

A)   interest is charged on the margin loan balance.

B)   the initial margin is effectively paid to the seller of the security by the buyer.

C)   the value of the security is the collateral for the loan.

D)   additional payment is required if margin falls below the maintenance margin.

4.Which of the following statements regarding margin in futures accounts is FALSE?

A)   Margin is usually 10% of the contract value for futures contracts.

B)   Margin must be deposited before a trade can be made.

C)   Margin is resettled daily.

D)   With futures margin, there is no loan of funds.

cfaedu

答案和详解如下：

1.The clearinghouse in a futures contract performs all but which of the following roles? The clearinghouse:

A)   guarantees traders against default from another party.

B)   guarantees the physical delivery of the underlying asset to the buyer of futures contracts.

C)   splits each trade and acts as a buyer to futures sellers and as a seller to futures buyers.

D)   allows traders to reverse their position without having to contact the other side of the position.

The correct answer was B)

The clearinghouse does not guarantee the physical delivery of the underlying asset. Indeed, most futures contracts do not have a physical delivery, but are reversed.

2.Initial margin deposits for futures accounts are:

A)   based on price volatility.

B)   set by the Federal Reserve for U.S. markets.

C)   typically 50% of the purchase price.

D)   usually larger for the short position.

The correct answer was A)

Margin deposits for futures trades are based on the price volatility of the underlying asset, are set by the clearinghouse, are equal for long and short positions, and are typically a small percentage of the contract value.

3.A similarity of margin accounts for both equities and futures is that for both:

A)   interest is charged on the margin loan balance.

B)   the initial margin is effectively paid to the seller of the security by the buyer.

C)   the value of the security is the collateral for the loan.

D)   additional payment is required if margin falls below the maintenance margin.

The correct answer was D)

Both futures accounts and equity margin accounts have minimum margin requirements that, if violated, require the deposit of additional funds. There is no loan in a futures account; the margin deposit is a performance guarantee. The seller does not receive the margin deposit in futures trades. The seller must also deposit margin in order to open a position.

4.Which of the following statements regarding margin in futures accounts is FALSE?

A)   Margin is usually 10% of the contract value for futures contracts.

B)   Margin must be deposited before a trade can be made.

C)   Margin is resettled daily.

D)   With futures margin, there is no loan of funds.

The correct answer was A)

The margin percentage is typically low as a percentage of the value of the underlying asset and varies among contracts on different assets based on their price volatility. The other statements are true.