Series 3 Unit 1 Practice Test questions and answers already solved 2024

Series 3 Unit 1 Practice Test
When a customer buys or sells a futures contract, that customer is
contingently liable for
A. The original margin
B. Not more than 70% of the cash value of the futures contract
C. The full value of the contract
D. None of the above - correct answer ✔C. The full value of the contract


A hedge position may NOT give full protection against adverse price
movements because
A. While the hedge is operative, the basis may change
B. Cash prices and futures prices seldom move in the same direction
C. Various futures months do not usually trade at the same price
D. Transportation costs vary from one location to another - correct answer
✔A. While the hedge is operative, the basis may change


A bona fide hedger must
A. Be a member of the exchange on which the commodity is traded
B. Trade through a member of the exchange on which the commodity is
traded
C. Be so designated by a financial institution the he is approved by the CFTC
D. Purchase or sell the actual commodity hedged with futures - correct
answer ✔D. Purchase or sell the actual commodity hedged with futures


Spot prices above futures prices typically reflect
A. Premium basis
B. Tight supplies