Question 1

Interest rate swaps involve the exchange of ________________.

Accepted Answer

A)   fixed rate bonds for floating rate bonds
B)   floating rate bonds for fixed rate bonds
C)   net interest payments and an actual principal swap
D)   net interest payments based on notional principal, but no exchange of principalE) B) and D)
F) All of the above

Question 2

If you expect a stock market downturn,one potential defensive strategy would be to __________.

Accepted Answer

A)   buy stock index futures
B)   sell stock index futures
C)   buy stock index options
D)   sell foreign exchange futuresE) B) and D)
F) A) and C)

Question 3

On Monday morning you sell one June T-bond futures contract at 97:27 or for $97,843.75. The contract's face value is $100,000. The initial margin requirement is $2,700 and the maintenance margin requirement is $2,000 per contract. Use the following price data to answer questions 67 through 70. 
-On which of the given days do you get a margin call?

Accepted Answer

A)   Monday
B)   Tuesday
C)   Wednesday
D)   NoneE) B) and C)
F) C) and D)

Question 4

Futures markets are regulated by the __________.

Accepted Answer

A)   AIMR
B)   CFTC
C)   CIA
D)   SECE) A) and B)
F) B) and D)

Question 5

The use of leverage is practiced in the futures markets due to the existence of _________.

Accepted Answer

A)   banks
B)   brokers
C)   clearinghouse
D)   marginE) A) and D)
F) A) and C)

Question 6

The price of a corn futures contract is $2.65 per bushel when the contract is issued and the commodity spot price is $2.55.When the contract expires,the two prices are identical.What principle is represented by this price behavior?

Accepted Answer

A)   Convergence
B)   Margin
C)   Basis
D)   VolatilityE) A) and B)
F) A) and C)

Question 7

If an asset price declines,the investor with a _______ is exposed to the largest potential loss.

Accepted Answer

A)   long call option
B)   long put option
C)   long futures contract
D)   short futures contractE) A) and B)
F) None of the above

Exam 17: Futures Markets and Risk Management

Futures markets are regulated by the __________.

Correct Answer
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Correct Answer
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If an asset price declines,the investor with a _______ is exposed to the largest potential loss.

Correct Answer
verified

Interest rate swaps involve the exchange of ________________.

Correct Answer
verified

If you expect a stock market downturn,one potential defensive strategy would be to __________.

Correct Answer
verified

The price of a corn futures contract is $2.65 per bushel when the contract is issued and the commodity spot price is $2.55.When the contract expires,the two prices are identical.What principle is represented by this price behavior?

Correct Answer
verified

The use of leverage is practiced in the futures markets due to the existence of _________.

Correct Answer
verified

Exam 17: Futures Markets and Risk Management

Futures markets are regulated by the __________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If an asset price declines,the investor with a _______ is exposed to the largest potential loss.

Correct AnswerverifiedShow Answer

Interest rate swaps involve the exchange of ________________.

Correct AnswerverifiedShow Answer

If you expect a stock market downturn,one potential defensive strategy would be to __________.

Correct AnswerverifiedShow Answer

The price of a corn futures contract is $2.65 per bushel when the contract is issued and the commodity spot price is $2.55.When the contract expires,the two prices are identical.What principle is represented by this price behavior?

Correct AnswerverifiedShow Answer

The use of leverage is practiced in the futures markets due to the existence of _________.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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