FIN 500 - Quiz 2

1. We need clean prices

because

• a) They give the trader the right trading price

• b) They make the market movements analysis easier

• c) They are more accurate than dirty prices

2. The difference between

futures and forwards is

• a) Forwards are more liquid

• b) Forwards are cheaper than futures

• c) Forwards could be non-standard contracts

3. The clearinghouse is

important for futures markets because

• a) It decreases counterparty risk

• b) It allows a better regulatory supervision

• c) It helps customize the settlement of trades

4. Futures contracts are

specified with the following items

• a) Contract size, maturity, and net results

• b) Asset, contract size, delivery arrangement

• c) Contract size, delivery months, margin calls

5.

Maintenance margin is

• a) A margin below which the trader’s margin may not fall

• b) Funds deposited to provide capital to absorb losses

• c) A margin to insurance the maintenance of each trade