9/5/24, 5:41 TEST BANK Chapter 19 Future and Forwards with
PM Answers
Chapter 19: Futures Contracts and Forward Rate
Agreements
1. Which of the following statements is correct?
A. Most futures contracts result in
delivery.
B. Only a small percentage of financial futures contracts results in
actual delivery.
C. Only a quarter of financial futures contracts results in actual
delivery.
D. Financial futures contracts never result in actual
delivery.
2. At the present time:
A. open-outcry trading occurs for commodity futures contracts in
Australia
B. the convention for quoting the prices of futures contracts varies between
exchanges
C. futures trading is permitted only for
commodities
D. futures trading is permitted only for financial
instruments
3. Which of the following is characteristic of futures trading on the Sydney Futures
Exchange (SFE)?
A. Pricing of bond contracts is on the basis of their yield to
maturity.
B. Transactions in the 'trading pits' are conducted by
'open outcry'.
C. The SFE clearing house (SFECH) enforces full payment of the initial
contract amount.
D. All of the given
answers.
about:bl 1/
,9/5/24, 5:41 TEST BANK Chapter 19 Future and Forwards with
PM Answers
4. Which of the following is a derivative product?
A. Commercia
l paper
B. Mortgag
e
C. Future
s
D. Treasury
note
5. The buyer of a financial futures contract:
A. takes the long
position
B. takes the short
position
C. has to record the contract with the clearing
house
D. has the obligation to deliver the underlying financial asset at the specified
future date
6. The buyer of a financial futures contract:
A. takes the short
position
B. has the obligation to deliver the underlying financial asset at the specified
future date
C. has the obligation to receive the underlying financial asset at the specified
future date
D. has to record the contract with the clearing
house
7. The seller of a futures contract:
A. takes the long
position
B. has the obligation to deliver the underlying financial asset at the specified
future date
C. has the obligation to receive the underlying financial asset at the specified
future date
D. may, at their choosing, deliver or receive the underlying financial assets at the
specified future date
about:bl 2/
,9/5/24, 5:41 TEST BANK Chapter 19 Future and Forwards with
PM Answers
8. The seller of a futures contract:
A. takes the long
position
B. takes the short
position
C. has the obligation to receive the underlying financial assets at the specified
future date
D. is expecting the price of the underlying asset to
increase
9. A futures trader who has a position in oil futures wants the price of oil to
in the future.
A. short;
double
B. short;
fall
C. short; stay the
same
D. short;
rise
10. A futures trader who has a position in oil futures wants the price of oil to
in the future.
A. long;
increase
B. long;
fall
C. short; stay the
same
D. short;
rise
11. A steel manufacturing company that expects a future iron price rise can take a/an:
A. arbitrage position on iron futures
contracts
B. long position on iron futures
contracts
C. short position on iron futures
contracts
D. marked-to-market position on iron futures
contracts
about:bl 3/
, 9/5/24, 5:41 TEST BANK Chapter 19 Future and Forwards with
PM Answers
12. The price of a futures contract is:
A. determined by market expectations of the spot price on the day
of delivery
B. determined each month by the futures
exchange
C. specified in each futures
contract
D. determined by demand and supply between market participants in the
futures market
13. The terms of a futures contract, for instance the quality and quantity of the
commodity and the delivery date, are specified by the:
A. buyer
s
B. buyers and
sellers
C. futures
exchange
D. brokers and
dealers
14. If an investor buys a three-year Commonwealth Treasury bond and on the delivery
date the interest rate of Treasury bonds is lower than they expected, they will have:
A. gained money on their long
position
B. lost money on their long
position
C. lost money on their short
position
D. gained money on their short
position
15. If an investor sells a three-year Commonwealth Treasury bond and on delivery date
the interest rate of Treasury bonds is higher than they expected, they will have:
A. gained money on their long
position
B. lost money on their long
position
C. lost money on their short
position
D. gained money on their short
position
about:bl 4/
PM Answers
Chapter 19: Futures Contracts and Forward Rate
Agreements
1. Which of the following statements is correct?
A. Most futures contracts result in
delivery.
B. Only a small percentage of financial futures contracts results in
actual delivery.
C. Only a quarter of financial futures contracts results in actual
delivery.
D. Financial futures contracts never result in actual
delivery.
2. At the present time:
A. open-outcry trading occurs for commodity futures contracts in
Australia
B. the convention for quoting the prices of futures contracts varies between
exchanges
C. futures trading is permitted only for
commodities
D. futures trading is permitted only for financial
instruments
3. Which of the following is characteristic of futures trading on the Sydney Futures
Exchange (SFE)?
A. Pricing of bond contracts is on the basis of their yield to
maturity.
B. Transactions in the 'trading pits' are conducted by
'open outcry'.
C. The SFE clearing house (SFECH) enforces full payment of the initial
contract amount.
D. All of the given
answers.
about:bl 1/
,9/5/24, 5:41 TEST BANK Chapter 19 Future and Forwards with
PM Answers
4. Which of the following is a derivative product?
A. Commercia
l paper
B. Mortgag
e
C. Future
s
D. Treasury
note
5. The buyer of a financial futures contract:
A. takes the long
position
B. takes the short
position
C. has to record the contract with the clearing
house
D. has the obligation to deliver the underlying financial asset at the specified
future date
6. The buyer of a financial futures contract:
A. takes the short
position
B. has the obligation to deliver the underlying financial asset at the specified
future date
C. has the obligation to receive the underlying financial asset at the specified
future date
D. has to record the contract with the clearing
house
7. The seller of a futures contract:
A. takes the long
position
B. has the obligation to deliver the underlying financial asset at the specified
future date
C. has the obligation to receive the underlying financial asset at the specified
future date
D. may, at their choosing, deliver or receive the underlying financial assets at the
specified future date
about:bl 2/
,9/5/24, 5:41 TEST BANK Chapter 19 Future and Forwards with
PM Answers
8. The seller of a futures contract:
A. takes the long
position
B. takes the short
position
C. has the obligation to receive the underlying financial assets at the specified
future date
D. is expecting the price of the underlying asset to
increase
9. A futures trader who has a position in oil futures wants the price of oil to
in the future.
A. short;
double
B. short;
fall
C. short; stay the
same
D. short;
rise
10. A futures trader who has a position in oil futures wants the price of oil to
in the future.
A. long;
increase
B. long;
fall
C. short; stay the
same
D. short;
rise
11. A steel manufacturing company that expects a future iron price rise can take a/an:
A. arbitrage position on iron futures
contracts
B. long position on iron futures
contracts
C. short position on iron futures
contracts
D. marked-to-market position on iron futures
contracts
about:bl 3/
, 9/5/24, 5:41 TEST BANK Chapter 19 Future and Forwards with
PM Answers
12. The price of a futures contract is:
A. determined by market expectations of the spot price on the day
of delivery
B. determined each month by the futures
exchange
C. specified in each futures
contract
D. determined by demand and supply between market participants in the
futures market
13. The terms of a futures contract, for instance the quality and quantity of the
commodity and the delivery date, are specified by the:
A. buyer
s
B. buyers and
sellers
C. futures
exchange
D. brokers and
dealers
14. If an investor buys a three-year Commonwealth Treasury bond and on the delivery
date the interest rate of Treasury bonds is lower than they expected, they will have:
A. gained money on their long
position
B. lost money on their long
position
C. lost money on their short
position
D. gained money on their short
position
15. If an investor sells a three-year Commonwealth Treasury bond and on delivery date
the interest rate of Treasury bonds is higher than they expected, they will have:
A. gained money on their long
position
B. lost money on their long
position
C. lost money on their short
position
D. gained money on their short
position
about:bl 4/
