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Q1. Which of the following statements regarding both futures contracts and forward contracts is least accurate? ffice ffice" />
A) They carry counterparty risk.
B) They are priced to have zero value at the initiation of the contract.
C) For deliverable contracts, the short must deliver the underlying asset at a future date
Correct answer is A)
The clearinghouse of the futures exchange is the counterparty to all futures contracts so that, unlike forward contracts, counterparty risk is not a concern with futures contracts.
Q2. Which of the following statements regarding forwards and futures is FALSE?
A) Unlike futures, forwards carry counterparty risk.
B) Unlike forwards, futures are always deliverable contracts.
C) Like futures, forwards are priced to have zero value at contract initiation.
Correct answer is B)
There are both deliverable and cash settlement futures contracts, just as with forwards.
Q3. Which of the following is NOT a feature that distinguishes futures contracts from forward contracts? Futures contracts:
A) are regulated by the government.
B) cover a specific quantity of the underlying asset.
C) are not customized securities.
Correct answer is B)
Both futures contracts and forward contracts cover a specific quantity of the underlying asset. The other characteristics only apply to futures contracts.
Q4. Madison Bailey recently purchased a futures contract. The transaction did NOT:
A) use a structured contract.
B) take place through a private party.
C) include a guaranty by a clearinghouse.
Correct answer is B)
A futures transaction is an exchange-traded contract. A forward contract occurs between private parties. The following table illustrates the differences between forwards and futures:
|
Forwards |
Futures |
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Private contracts |
Exchange-traded contracts |
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Unique contracts |
Structured contracts |
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Default Risk |
Guaranteed by clearinghouse |
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No up front cash |
Margin Account |
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Low/no regulation |
Regulated |
Q5. Which of the following statements about forward contracts and futures contracts is FALSE? Forwards:
A) are private contracts, unlike futures.
B) are unique contracts, unlike futures.
C) have no default risk, unlike futures.
Correct answer is C)
Forwards have default risk because the seller may not deliver and the buyer may not accept delivery.
Q6. Which of the following is a difference between futures and forward contracts? Futures contracts are:
A) standardized.
B) over-the-counter instruments.
C) larger than forward contracts.
Correct answer is A)
As opposed to forward contracts, futures contracts are traded over an organized exchange and are standardized in size, maturity, quality of deliverable, etc.
Q7. Which of the following statements about futures and forwards is FALSE?
A) The buyer of a forward posts a margin directly with the seller.
B) Futures contracts are highly structured; forward contracts are unique to each transaction.
C) An individual could sell an asset in the future using either a future or a forward contract.
Correct answer is A)
Although forward contracts are between private parties, no margin is required. The other statements are true. Futures and forwards are both contracts to sell an asset in the future.
Q8. Which type of futures contract does NOT allow for the underlying goods to be delivered?
A) Index.
B) Interest rate.
C) Agricultural.
Correct answer is A)
The nature of an index future realistically prohibits settlement in the underlying commodity. For example, the Standard and Poor’s 500 stock index would require settlement in 500 different common stocks, in the exact proportion of the total value as exists in the index at expiration of the future. Agriculture and interest rate futures both involve deliverable commodities.
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发表于 2009-3-2 10:03
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