futures

Which of the following is NOT a commonly traded futures contract?

• Gold

• Real estate properties

• Government bonds

• Crude oil

Which of the following is a potential risk for a futures market participant?

• a) Guaranteed fixed returns

• b) Unlimited losses

• c) No initial margin requirement

• d) Guaranteed physical delivery

A corn farmer who wants to lock in a price for their upcoming harvest would be considered

• Speculator

• Hedger

• Arbitrator

• Market maker

What is the key difference between futures and forward contracts?

• Futures contracts are standardized, while forward contracts are customized.

• Forward contracts are traded on organized exchanges, while futures contracts are not.

• Futures contracts have no expiration date, while forward contracts do

• Forward contracts require margin deposits, while futures contracts do not.

How are futures contracts settled?

• Physical delivery of the underlying asset

• Cash settlement based on the difference between the contract price and market price

• The buyer's bank account is debited, and the seller's account is credited.

• The contract is automatically extended for another term.

Which of the following is NOT a type of futures market participant?

• Speculator

• Hedger

• Arbitrator

• Investor

What is the main purpose of using futures contracts?

• To guarantee a profit on the underlying asset.

• To speculate on price movements of the underlying asset.

• To eliminate all risk associated with the underlying asset.

• To avoid taxes on capital gains.

What is a futures contract?

• An agreement to buy or sell an asset at a predetermined price on a specific future date.

• An agreement to exchange currencies at the current market rate.

• An agreement to lend money at an adjustable interest rate.

• An agreement to share ownership of a company's stock.

Which of the following is a characteristic of a futures contract? a) It is customized between the buyer and seller. b) It typically has no expiration date. c) It can only be traded on a physical exchange.

• It is customized between the buyer and seller.

• It typically has no expiration date

• It can only be traded on a physical exchange

• It requires margin deposits to secure the contract.

What is meant by "marking to market" in the context of futures trading?

• Adjusting the expiration date of a futures contract.

• Updating the contract specifications to reflect changing market conditions.

• Calculating and settling daily gains or losses based on current market prices.

• Transferring a futures contract to another investor.