1. A person with a long position in a commodity futures contract wants the price

Question

1. A person with a long position in a commodity futures contract wants the price of the commodity to ______. A. decrease substantially B. increase substantially C. remain unchanged D. increase or decrease substantially 2. The clearing corporation has a net position equal to ______. A. the open interest B. the open interest times two C. the open interest divided by two D. zero 3. The time on Friday with simultaneous expirations of S&P; index futures, S&P; index options and options on some individual stocks is commonly called the _______. A. mad minute B. double-witching hour C. happy hour D. triple-witching hour 4. Futures contracts have many advantages over forward contracts except that _________. A. futures positions are easier to trade B. futures contracts are tailored to the specific needs of the investor C. futures trading preserves the anonymity of the participants D. counterparty credit risk is not a concern on futures 5. The open interest on silver futures at a particular time is the number of __________. A. all outstanding silver futures contracts B. long and short silver futures positions counted separately on a particular trading day C. silver futures contracts traded during the day D. silver futures contracts traded the previous day 6. An investor who goes long in a futures contract will _____ any increase in value of the underlying asset and will _____ any decrease in value in the underlying asset. A. pay; pay B. pay; receive C. receive; pay D. receive; receive 7. The advantage that standardization of futures contracts brings is that _____ is improved because ____________________. A. liquidity; all traders must trade a small set of identical contracts B. credit risk; all traders understand the risk of the contracts C. pricing; convergence is more likely to take place with fewer contracts D. trading cost; trading volume is reduced 8. A wheat farmer should __________ in order to reduce his exposure to risk associated with fluctuations in wheat prices. A. sell wheat futures B. buy wheat futures C. buy a contract for delivery of wheat now, and sell a contract for delivery of wheat at harvest time D. sell wheat futures if the basis is currently positive and buy wheat futures if the basis is currently negative 9. You take a long position in a futures contract of one maturity and a short position in a contract of a different maturity, both on the same commodity. This is called __________. A. a cross hedge B. a reversing trade C. a spread position D. a straddle 10. Initial margin is usually set in the region of ________ of the total value of a futures contract. A. 5%-15% B. 10%-20% C. 15%-25% D. 20%-30%

Explanation / Answer

its b

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