1. Which of the following best describes options on futures? A. the right to buy or...
1. Which of the following best describes options on futures? A. the right to buy or sell a futures contract B. the right to take delivery of a cash commodity C. the right to assign a futures contract
Homework Answers
An option on a futures contract gives the holder the right, but not the obligation, to buy or sell a specific futures contract at a strike price on or before the option's expiration date.
The answer is A. the right to buy or sell a futures contract
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1. Which of the following best describes options on futures? A.
the right to buy or...
of the following describes a futures contract? ser) has the right (but not the obligation) to...
of the following describes a futures contract? ser) has the right (but not the obligation) to buy a stock 10. Which of the following des A) The owner (buyer) has ther or asset) at a specific price. B) The owner has the right but specific price. C) The owner has the obligation to buy er has the right (but not the obligation) to sell an asset at a has the obligation to buy an asset at a specific price. D)...
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...
1. Which of the following trades implies that ownership has been taken? a. Buying a futures...
1. Which of the following trades implies that ownership has been taken? a. Buying a futures contract. b. Selling a futures contract. c. Buying a stock. d. Shorting a stock. e. None of the above implies ownership. The following transactions are the only ones made during the first 4 days a futures contract trades. Answer question 2 based on this table. DAY TRANSACTION S O 1 A Long 30, B Short 30 2 A Long 55, C Short 55 3...
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....
Which one of the following statements is the best description of a commodity swap? A) A...
Which one of the following statements is the best description of a commodity swap? A) A portfolio of forward contracts obligating the fixed price payer to buy the commodity at the settlement (reset) dates, at the swap price B) An agreement to buy or sell a commodity at the spot price that prevails in the future C) A portfolio of options allowing the fixed price payer to buy the commodity at the settlement (reset) dates, at the swap price D)...
1. Which of the following best describes the meaning of the multiplicities next to the number...
1. Which of the following best describes the meaning of the
multiplicities next to the number 1 in the preceding diagram?
Stocks are traded in only one exchange.
Stocks are traded in at least one exchange.
Stocks are traded in a minimum of zero exchanges.
Stocks are traded in a maximum of many exchanges.
Both c and d are correct.
2. Which of the following best describes the meaning of the
multiplicities next to the number 2 in the preceding...
1.Which of the following is not the reason for Basic risk of hedging using futures? a....
1.Which of the following is not the reason for Basic risk of hedging using futures? a. The asset whose price is to be hedge may not be exactly the same as the underlying asset of the futures contract b. The asset whose price is to be hedge may not be exactly the same as the price of the futures contract c. The hedger may not be certain of the exact date the asset will be bought or sold d. The...
1. Consider the futures contract to buy/sell December gold for $500 per ounce on the New...
1. Consider the futures contract to buy/sell December gold for $500 per ounce on the New York Commodity Exchange (CMX). The contract size is 100 ounces. The initial margin is S3,000, and the maintenance margin is $1,500. 1.a. Suppose that you enter into a long futures contract to buy December for $500 per ounce on the CMX What change in the futures price will lead to a margin call? If you enter a short futures contract, what futures price will...
Which of the following desc The owner (buyer has the right asset) at a specific price....
Which of the following desc The owner (buyer has the right asset) at a specific price. The owner has the right but no cific price. e following describes a futures contract? a) nas the right (but not the obligation) to buy a stock Cite ornat a spesern The owner has the obligation to buy an asset at a spec e owner has the obligation to sell an asset at a specific price. Which stock in the Dow Jones Industrials has...
AgriCrop Company produces and sells soybeans. The firm plans to harvest its current crop of soybeans...
AgriCrop Company produces and sells soybeans. The firm plans to harvest its current crop of soybeans in six months and is concerned about price volatility in the soybean market. Which of the following would be considered a valid strategy for hedging this exposure? a. "Buy" soybean futures (take a "buyer's" position in a futures contract) b. "Sell" soybean futures (take a "seller's" position in a futures contract) c. Write (sell) put options on soybeans d. Hold (buy) call options on...
of the following describes a futures contract? ser) has the right (but not the obligation) to buy a stock 10. Which of the following des A) The owner (buyer) has ther or asset) at a specific price. B) The owner has the right but specific price. C) The owner has the obligation to buy er has the right (but not the obligation) to sell an asset at a has the obligation to buy an asset at a specific price. D)...
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...
1. Which of the following trades implies that ownership has been taken? a. Buying a futures contract. b. Selling a futures contract. c. Buying a stock. d. Shorting a stock. e. None of the above implies ownership. The following transactions are the only ones made during the first 4 days a futures contract trades. Answer question 2 based on this table. DAY TRANSACTION S O 1 A Long 30, B Short 30 2 A Long 55, C Short 55 3...
1. Which of the following best describes the meaning of the
multiplicities next to the number 1 in the preceding diagram?
Stocks are traded in only one exchange.
Stocks are traded in at least one exchange.
Stocks are traded in a minimum of zero exchanges.
Stocks are traded in a maximum of many exchanges.
Both c and d are correct.
2. Which of the following best describes the meaning of the
multiplicities next to the number 2 in the preceding...
1. Consider the futures contract to buy/sell December gold for $500 per ounce on the New York Commodity Exchange (CMX). The contract size is 100 ounces. The initial margin is S3,000, and the maintenance margin is $1,500. 1.a. Suppose that you enter into a long futures contract to buy December for $500 per ounce on the CMX What change in the futures price will lead to a margin call? If you enter a short futures contract, what futures price will...
Which of the following desc The owner (buyer has the right asset) at a specific price. The owner has the right but no cific price. e following describes a futures contract? a) nas the right (but not the obligation) to buy a stock Cite ornat a spesern The owner has the obligation to buy an asset at a spec e owner has the obligation to sell an asset at a specific price. Which stock in the Dow Jones Industrials has...
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