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LOS d: Describe how a futures contract can be terminated at or prior to expiration by a close-out (i.e., offset), a delivery, an equivalent cash settlement, or an exchange-for-physicals.
Q1. An exchange-for-physicals, as it pertains to futures contracts:
A) is another term for delivering an asset to satisfy a futures contract.
B) is another term for accepting delivery of an asset to satisfy a futures contract.
C) involves an agreement off the floor of the exchange.
Q2. Which of the following statements about closing a futures position through delivery is most accurate?
A) Although the popularity of physical delivery has decreased over time, delivery by cash settlement remains the most popular method of closing a futures position.
B) Delivery is also known as exchange for physicals (EFP).
C) Depending on the wording of the contract, a trader may close a contract by either delivering the goods to a designated location or by making a cash settlement of any gains or losses.
Q3. Which of the following statements about closing a futures position is least accurate?
A) Closing a position through delivery refers exclusively to the physical delivery of goods.
B) Few futures positions are settled by delivery of cash or assets.
C) Except for exchange for physicals (EFP) transactions, futures contracts must be closed on the exchange floor.
Q4. All of the following are methods to close out a futures position EXCEPT:
A) allowing the contract to expire without taking action.
B) delivery of the underlying commodity.
C) through an exchange for physicals with another trader.
Q5. Which method is NOT an appropriate way to close out a futures contract?
A) Reverse trade.
B) Delivery.
C) Default.
Q6. Which of the following statements about closing a futures contract through offset is most accurate?
A) A low percentage of offsets take place ex-pit.
B) In an offset, or reversing trade, a trader makes an exact opposite trade (maturity, quantity, and good) to her current position, either through the clearinghouse or a private party.
C) The clearinghouse nets the position to zero.
Q7. Prior to contract expiration the short in a futures contract can avoid futures exposure by:
A) using an exchange-for-physicals.
B) paying a cash settlement amount.
C) entering into a reversing trade.
Q8. Which of the following is least likely a way to terminate a long position in a deliverable futures contract at expiration?
A) Close-out at expiration.
B) An equivalent cash settlement.
C) An exchange-for-physicals.
Q9. Closing out a futures position prior to expiration:
A) can only be done by the long.
B) can be done by entering into an offsetting trade at the current futures price.
C) removes price risk but not necessarily counterparty risk.
Q10. An offsetting trade is used to:
A) close out a futures position prior to expiration.
B) fully hedge a risk arising in the normal course of business activity.
C) partially hedge the interest rate risk of a bond position.
Q11. Most deliverable futures contracts are settled by:
A) an offsetting trade.
B) delivery of the asset at contract expiration.
C) a cash payment at expiration.
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发表于 2009-3-2 10:16
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