Which of the following are TRUE regarding the differences between futures and forward contracts? Futures Forward contracts contracts No Yes I. Is the holder obligated to buy the underlying asset on the expiration date? II. Are the contracts tailored to the needs of each party? III. Are the contracts marked-to-market and settled daily? IV. Are the contracts relatively liquid? No Yes Yes Yes No No

Which of the following are TRUE regarding the differences between futures and forward contracts? Futures Forward contracts contracts No Yes I. Is the holder obligated to buy the underlying asset on the expiration date? II. Are the contracts tailored to the needs of each party? III. Are the contracts marked-to-market and settled daily? IV. Are the contracts relatively liquid? No Yes Yes Yes No No

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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What are the key differences between future and forward contracts? a) direct contract for forwards b) clearing house for futures c) futures have less risk d) futures have a standard amount
A) What are the main differences between forward contracts and futures contracts. b) What is meant by the Exchange Delivery Settlement Price' (EDSP) of a fut
Identify which of the following instrumets are used for hedging receivables Forex Borrowing Choose..V Choose... No Yes Choose... Spot Contract Futures Contract, Option contract Choose... Forward Contract Choose... Forex Lending Choose...
Which of the following increases basis risk? Select one: O a. A large difference between the futures prices when the hedge is put in place and when it is closed out O b. Dissimilarity between the underlying asset of the futures contract and the hedger's exposure O c. Areduction in the time between the date when the futures contract is closed and its delivery month O d. None of the above
which one is correct please confirm? Q9: Parties who have bought a futures contract and thereby agreed to _____ (take delivery of) the bonds are said to have taken a ____ position. sell; short buy; short sell; long buy; long
detail two procedures which the seller of a futures contract can use to lock in a gain at some time t, 0<t<T.
In the futures markets the buyer of a financial futures contract: a. has the obligation to deliver the underlying financial asset at the specified future date. b. takes the short position. c. takes the long position. d. has to record the contract with the clearing house.
34) What is an interest-rate futures contract? How does it differ from an interest-rate forward contract? 35) Explain using an example the statement that "at the expiration date of a futures contract, the price of the contract is the same as the price of the underlying asset to be delivered." 36) Where are financial futures traded? Describe that market.
The following statements relate to derivatives. Which of the following is FALSE?a. Swaps may have cashflows as its underlying assets.b. Options allow the buying party to pay a price for a chance to buy or sell the underlying asset .c. Futures are forward commitments.d. Futures and forwards may be contingent claims wherein the contract can be cancelled upon the agreement of both parties.
a) Define Forwards and Futures. b)Explain the differences between these instruments and how these derivatives are used to mitigate risk. nb: answer question a and b
Which of the following is NOT true O a. Futures contracts nearly always last longer than forward contracts O b. Delivery or final cash settlement usually takes place with forward contracts; the same is not true of futures contracts. O c. Futures contracts are standardized; forward contracts are not. O d. Forward contracts usually have one specified delivery date; futures contract often have a range of delivery dates.
6. Which one of the following statements is incorrect regarding the margining of exchange-traded futures contracts? (a) If an investor fails to deposit variation margin in a timely manner, the positions may be liquidated by the carrying broker. (b) Initial margin is the amount of money that must be deposited when a futures contract is opened. (c) A margin call will be issued if the investor's margin account balance drops below the mainte- nance level. (d) A margin call will be issued only if the investor's margin account becomes negative 2 6

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