ACCT 2011

. A(n) ____ is a standardized agreement to deliver or receive a specified amount of a specified financial instrument at a specified price and date. a. option contract b. brokerage contract c. fin ancial futures contract d. margin call ANS: C PTS: 1 2. Interest rate futures are not available on a. Treasury bonds. b. Treasury notes. c. Eurodollar CDs. d. the S&P 500 index. ANS: D PTS: 1 3. ____ take positions in futures to reduce their exposure to future movements in interest rates or stock prices. a. Hedgers b. Day traders c. Position traders d. None of the above ANS: A PTS: 1 4. ____ trade futures contracts for their own account. a. Commission brokers b. Floor brokers c. Commission traders d. Floor traders ANS: D PTS: 1 5. The initial margin of a futures contract is typically between ____ percent of a futures contract's full value. a. 0 and 2 b. 5 and 18 c. 25 and 40 d. 45 and 60 ANS: B PTS: 1 6. Futures exchanges take buy or sell positions on futures contracts. a. True b. False ANS: F PTS: 17. If the prices of Treasury bonds ____, the value of an existing Treasury bond futures contract should ____. a. increase; be unaffected b. decrease; be unaffected c. A and B d. decrease; decrease e. decrease; increase ANS: D PTS: 1 8. Assume that a T-bill futures contract with a face value of $1 million is purchased at a price of $95.00 per $100 face value. At settlement, the price of T-bills is $95.50. What is the difference between the selling and purchase price of the futures contract? a. $.50 b. $50 c. $500 d. $5,000 e. none of the above ANS: D PTS: 1 9. If speculators believe interest rates will ____, they would consider ____ a T-bill futures contract today. a. increase; selling b. increase; buying c. decrease, selling d. decrease; purchasing a call option on ANS: A PTS: 1 10. Financial futures contracts on U.S. securities are ____ by non-U.S. financial institutions. a. not allowed to be traded b. are rarely desired c. are commonly traded d. A and B ANS: C PTS: 1 11. Assume that speculators ha