Exam Questions and CORRECT Answers
forward contracts are traded: - CORRECT ANSWER - over the counter
futures contracts are traded on: - CORRECT ANSWER - exchanges
forward contracts last longer than futures contracts - CORRECT ANSWER - true
futures contracts are standardized - CORRECT ANSWER - true
forward contracts are standardized - CORRECT ANSWER - false
Forward contracts usually have one specified delivery date - CORRECT ANSWER - true
futures contract often have a range of delivery dates - CORRECT ANSWER - true
margin call formula (short position) - CORRECT ANSWER - margin call occurs when
>(initial margin - Maintenance margin) is lost from the margin account
because of the short position, each 1¢ increase is a loss equal to .01*number of units
so the margin call will be when:
(futures price - spot price) * # of units > (initial-maintenance)
long position formula for one asset - CORRECT ANSWER - spot price @ maturity -
delivery price
short position formula for one asset - CORRECT ANSWER - delivery price - spot price @
maturity