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Q9. Which of the following statements about futures is least accurate?ffice ffice" />
A) The exchange-mandated uniformity of futures contracts reduces their liquidity.
B) Futures contracts have a maximum daily allowable price limit.
C) The futures exchange specifies the minimum price fluctuation of a futures contract.
Correct answer is A)
The exchange-mandated uniformity of futures contracts increases their liquidity.
Q10. Which is the only type of commodity where trading in forward contracts is larger than trading with future contracts?
A) Agricultural.
B) Foreign currency.
C) Interest rate.
Correct answer is B)
Trading in foreign currency forwards is far larger than the trading in futures. For example, with international trade, businesses can hedge against adverse currency fluctuations. But each business arrangement is unique, and most require the flexibility of a forward, whose terms are not standardized, that meets their special needs.
Q11. The clearinghouse, in ffice:smarttags" />U.S. futures markets, does NOT:
A) guarantee performance of futures contract obligations.
B) choose which assets will have futures contracts.
C) act as a counterparty in futures contracts.
Correct answer is B)
The exchange decides which contracts will be traded and their specifications. The clearinghouse acts as the counterparty to every contract and guarantees performance.
Q12. Which of the following statements regarding futures contracts is least accurate?
A) The exchange sets the times of trading for futures contracts.
B) The long will have gains when the futures price rises above the initial contract price.
C) Price fluctuations can be any amount.
Correct answer is C)
The minimum price fluctuation, called a ‘tick’, is set by the exchange. The other statements are true
Q13. All of the following are characteristics of futures contracts EXCEPT:
A) they are liquid.
B) they trade in a dealer (over the counter) market.
C) the contract size is standardized.
Correct answer is B)
Futures contracts trade on organized exchanges; forward contracts are created by dealers.
Q14. Standardization features of futures contracts do not include the:
A) delivery time.
B) quality of the good that can be delivered.
C) delivery price of the commodity.
Correct answer is C)
The delivery, or spot price at contract expiration, of a commodity is a variable and cannot be included in a futures contract. Quality and delivery time are both part of the standardized terms of a futures contract.
Q15. Standardized futures contracts are an aid to increased market liquidity because:
A) standardization of the futures contract stabilizes the market price of the underlying commodity.
B) standardization results in less trading activity.
C) uniformity of the contract terms broadens the market for the futures by appealing to a greater number of traders.
Correct answer is C)
Although a forward may have value to someone other than the original counterparties, the non-standardized terms limit the level of interest, hence its marketability and liquidity. The standardized terms of a future give it far more flexibility to traders, giving rise to a strong secondary market and greater liquidity.
Q16. Futures have greater market liquidity than forward contracts, because futures are:
A) developed with specific characteristics to meet the needs of the buyer.
B) standardized contracts.
C) sold only for widely traded commodities, unlike forwards.
Correct answer is B)
Forward contracts do not have standardized terms as futures have. Forwards have the same terms as futures, but those terms are written to meet the specific needs of the two or more parties to the contract. This specialization limits the marketability, hence liquidity, of the forward contact.
Q17. For a futures trade:
A) the buyer pays the bid price; the seller receives the ask price.
B) a single price is determined by supply and demand.
C) the seller receives the bid price; the buyer pays the ask price.
Correct answer is B)
There is no bid/ask spread in futures trades; the price for the trade is determined on the floor of the exchange and is the single price the long will pay the short for the asset at the termination of the contract.
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发表于 2009-3-2 10:05
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