The forward contract differs from a futures contract in that:A)the forward contract is to be settled...
The forward contract differs from a futures contract in that:A)the forward contract is to be settled immediately. B)the futures contract specifies a fixed amount and arranged date, whereas the forward contract can be for any amount or date. C)the futures contract cannot be traded in a market, whereas the forward contract can be bought in the market. D)forward contracts are standardized, whereas futures contracts are not standardized.
Homework Answers
The correct answer is
B. The futures contract specifies a fixed date and amount whereas forward contracts can be for any amount and date
Since future contracts are standardized and are traded on exchanges
Both contracts are settled in future
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The forward contract differs from a futures contract in
that:A)the forward contract is to be settled...
Comparing forward and futures contracts, we can say that: a. forward contracts are traded on organized...
Comparing forward and futures contracts, we can say that: a. forward contracts are traded on organized exchanges while futures contracts are traded over-the-counter. b. forward contracts are standardized contracts while futures contracts are usually tailor-made. c. delivery of the underlying asset is usually made in forward contracts and delivery of the underlying asset is seldom made in futures contracts. d. forward contracts are mainly used for speculative purpose while futures contracts are mainly used for hedging purpose
QUESTION 117 Which of the following regarding futures contracts is least accurate? a. Futures contracts are...
QUESTION 117 Which of the following regarding futures contracts is least accurate? a. Futures contracts are less liquid than forward contracts. b. Futures contracts are marked-to-market. c. Futures contracts are traded on a regulated exchange. d. Futures contracts allow more delivery options than forward contracts. QUESTION 118 A long position in a futures contract expiring in November can be offset by: a. Selling a future contract expiring in November. b. Selling a future contract expiring anytime between September and December....
The derivatives markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are...
The derivatives markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are some common types of derivatives contracts. True or False: One of the major differences between futures and forward contracts is that forward contracts are revalued and marked-to-market daily, whereas futures contracts are traded on an organized exchange. O False True Which of the following are used to hedge against fluctuating interest rates, stock prices, and exchange rates? Commodity futures Financial futures O Ahmad feels...
Which of the following statements is most accurate?Briefly explain A. Futures contracts could be private transactions. B. Forward contracts marked to market daily are futures contracts. C. A Forward c...
Which of the following statements is most accurate?Briefly explain A. Futures contracts could be private transactions. B. Forward contracts marked to market daily are futures contracts. C. A Forward contract could have the same liquidity as a Futures contracts. D. Futures contracts require that both parties to the transaction have a high degree of creditworthiness.
2. Suppose the maintenance margin is $5 and initial margin is $10. A long trader trades...
2. Suppose the maintenance margin is $5 and initial margin is $10. A long trader trades 10 contract in the market. when the Day 2's ending balance is $40/ what should the trader do? a. Do nothing but keep trading in Day 3 b. Deposit extra $10 c. Deposit extra $60 d. deposit extra $100 e. None above 3. Which of the following statement regarding clearing hours in futures market is wrong? a. Clearing house collects margin b. Clearing house...
QUESTION 123 A futures contract will have its price adjusted each day of the contract’s life...
QUESTION 123 A futures contract will have its price adjusted each day of the contract’s life - either up or down, depending on current market conditions. This is called: a. Requirements for futures contracts. b. Marking to market. c. Initial margin requirements. d. Maintenance margin requirements. QUESTION 124 With a currency swap, on what date(s) are principal amounts exchanged in each currency? a. At the beginning of the contract only. b. At the end of the contract only. c. At...
Can anyone answer the question and explain it thx alot The following statement is to be...
Can anyone answer the question and explain it thx alot
The following statement is to be used in answering questions 29 and 30. Company X, a low-rated firm, desires a fixed-rate, long-term loan. X presently has access to floating interest rate funds at a margin of 1.25% over LIBOR. Its direct borrowing cost is 11% in the fixed-rate bond market. In contrast, company Y, which prefers a floating-rate loan, has access to fixed-rate funds in the Eurodollar bond market at...
NEW R 3. A Canadian company pays $300,000 consulting fee to a U.S. consulting company in...
NEW R 3. A Canadian company pays $300,000 consulting fee to a U.S. consulting company in San Diego. Which of the following account in the U.S. balance of payment statement will be affected by the cross-border transaction? A) Current account B) Capital account C) Foreign reserve account D) Unilateral payment account 6. Newstar, Inc., based in the U.S., exports products to a German firm and will receive E100,000 in six months. On February 1, the spot rate of the euro...
Why were futures originally created? A. For market speculators to gain more leverage B. As part...
Why were futures originally created? A. For market speculators to gain more leverage B. As part of a fortune-telling cult C. To hedge against uncertainty D. As a counterpart for options contracts with expiration dates in the future What is the Contract Size? A. The total amount represented by one contract B. The length of the technical specifications sheet each party signs C. How far in the future the contract matures D. How many of the contract is issued on...
(4) The notional amount of a derivative instrument is a. related to the number of units...
(4) The notional amount of a derivative instrument is a. related to the number of units specified in the derivative and the price that relates to the asset or liability underlying the derivative. b. the change in the price or rate that relates to the asset or liability underlying the derivative. c. the price or rate that relates to the asset or liability underlying the derivative. d. the number of units that is specified in the derivative instrument. (5) Forward...
The derivatives markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are some common types of derivatives contracts. True or False: One of the major differences between futures and forward contracts is that forward contracts are revalued and marked-to-market daily, whereas futures contracts are traded on an organized exchange. O False True Which of the following are used to hedge against fluctuating interest rates, stock prices, and exchange rates? Commodity futures Financial futures O Ahmad feels...
Can anyone answer the question and explain it thx alot
The following statement is to be used in answering questions 29 and 30. Company X, a low-rated firm, desires a fixed-rate, long-term loan. X presently has access to floating interest rate funds at a margin of 1.25% over LIBOR. Its direct borrowing cost is 11% in the fixed-rate bond market. In contrast, company Y, which prefers a floating-rate loan, has access to fixed-rate funds in the Eurodollar bond market at...
NEW R 3. A Canadian company pays $300,000 consulting fee to a U.S. consulting company in San Diego. Which of the following account in the U.S. balance of payment statement will be affected by the cross-border transaction? A) Current account B) Capital account C) Foreign reserve account D) Unilateral payment account 6. Newstar, Inc., based in the U.S., exports products to a German firm and will receive E100,000 in six months. On February 1, the spot rate of the euro...
(4) The notional amount of a derivative instrument is a. related to the number of units specified in the derivative and the price that relates to the asset or liability underlying the derivative. b. the change in the price or rate that relates to the asset or liability underlying the derivative. c. the price or rate that relates to the asset or liability underlying the derivative. d. the number of units that is specified in the derivative instrument. (5) Forward...
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