If speculators believe interest rates will ____________ a T-bill futures, they would consider_____contract today.

decrease; purchasing a call option on

Municipal Bond Index (MBI) futures ____

A) involve a physical exchange of bonds.

B) are based on a Treasury bond index.

C) are based on actively traded corporate bonds.

Systemic risk reflects the risk that a particular event could _____

B) spread adverse effects among several firms or among financial markets.

A) cause losses at a firm due to inadequate management control.

C) cause a loss in value due to market conditions.

D) have a larger effect on the futures position than on the position being hedged.

A savings and loan association has long-term fixed-rate mortgages financed by short-term funds. It hedges by selling Treasury bond futures. If interest rates decline, and many mortgages are prepaid __

D) a loss on the futures contracts more than offsets the favorable effect on the mortgage portfolio.

A) the gain on the futures contracts offsets the loss on the mortgages.

B) the gain on the mortgages offsets the loss on the futures contracts.

C) the gain on the futures contracts more than offsets any unfavorable effects on mortgages.

. If a financial institution expects that the market value of its municipal bonds will decline because of economic conditions, it could hedge its position by ________futures contracts on________ .

D) selling; a Municipal Bond Index

B) purchasing; the S&P 500 Index

C) purchasing; a Municipal Bond Index

The net gain or loss on a futures contract for a stock index that is not closed out is based on the difference between the futures price when the initial position was created and the futures price at______

B) the date at which the futures price reaches its maximum.

C) the date at which the futures price reaches its minimum.

D) the date three months beyond the date when the initial position was taken.

Assume that a stock mutual fund uses stock index futures as it conducts dynamic asset allocation. This means that the mutual fund ________

A) liquidates its stocks whenever it expects a market downturn.

B) maintains a constant buy position in stock index futures.

C) maintains a constant sell position in stock index futures.

The prices of stock index futures ___

A) are always the same as the prices of the stocks representing the index.

B) are always a little above the prices of the stocks representing the index.

C) are always a little below the prices of the stocks representing the index.

The actions of numerous institutional investors to sell stock index futures instead of selling stocks to prepare for a market decline would likely cause the index futures price to be ________

B) below the prevailing stock prices.

A) equal to the prevailing stock prices.

C) above the prevailing stock prices.

. Which of the following is incorrect regarding organized exchanges trading financial futures contracts?

B) Organized exchanges ensure that the seller of the futures contract always delivers the securities covered by the contract, whether the contract was settled prior to the settlement date or not.

A) Organized exchanges establish and enforce rules for the trading of financial futures contracts.

C) Organized exchanges clear, settle, and guarantee all transactions that occur on their exchanges.

D) The operations of financial futures exchanges are regulated by the Commodity Futures Trading Commission (CFTC).

E) All of the above are correct.

Which of the following statements is incorrect?

B) Circuit breakers guarantee that prices will turn upward.

A) Circuit breakers are trading restrictions imposed on specific stocks or stock indexes.

C) Circuit breakers may be able to prevent large declines in prices that would be attributed to panic selling rather than to fundamental forces.

D) Circuit breakers may allow investors to determine whether circulating rumors are true.

7. KHANH HOA _ CHUONG 13

Authored by Dung Kim

English

University

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71 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A(n) _________is a standardized agreement to deliver or receive a specified amount of a specified financial instrument at a specified price and date.

option contract

brokerage contract

financial futures contract

margin call

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Interest rate futures are not available on
A) Treasury bonds.
B) Treasury notes.
C) Eurodollar CDs.
D) the S&P 500 index.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

______________take positions in futures to reduce their exposure to future movements in interest rates or stock prices.
A) Hedgers
B) Day traders
C) Position traders
D) none of the above

Hedgers

Day traders

Position traders

none of the above

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

__________ trade futures contracts for their own account.

Commission brokers

Floor brokers

Commission traders

Floor traders

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The initial margin of a futures contract is typically percent of a between __________ futures contract’s full value.

0 and 2

5 and 18

25 and 40

45 and 60

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Futures exchanges facilitate the trading process and take buy or sell positions on futures contracts.

true

false

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If the prices of Treasury bonds __, the value of an existing Treasury bond futures contract should _

A. increase; be unaffected

B. decrease; be unaffected

C. A and B

D) decrease; decrease

E) decrease; increase

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7. KHANH HOA _ CHUONG 13

A(n) _________is a standardized agreement to deliver or receive a specified amount of a specified financial instrument at a specified price and date.

Interest rate futures are not available on
A) Treasury bonds.
B) Treasury notes.
C) Eurodollar CDs.
D) the S&P 500 index.

______________take positions in futures to reduce their exposure to future movements in interest rates or stock prices.
A) Hedgers
B) Day traders
C) Position traders
D) none of the above

__________ trade futures contracts for their own account.

The initial margin of a futures contract is typically percent of a between __________ futures contract’s full value.

Futures exchanges facilitate the trading process and take buy or sell positions on futures contracts.

If the prices of Treasury bonds __, the value of an existing Treasury bond futures contract should _

Assume that a T-bill futures contract with a face value of $1 million is purchased at a price of $95.00 per $100 face value. At settlement, the price of T-bills is $95.50. What is the difference between the selling and purchase price of the futures contract?

If speculators believe interest rates will ________ a T-bill futures, they would consider_contract today.

Financial futures contracts on U.S. securities are _______ by non-U.S. financial institutions.
A) not allowed to be traded
B) are rarely desired
C) are commonly traded
D) A and B

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Discover more resources for English

7. KHANH HOA _ CHUONG 13

A(n) _________is a standardized agreement to deliver or receive a specified amount of a specified financial instrument at a specified price and date.

Interest rate futures are not available on A) Treasury bonds. B) Treasury notes. C) Eurodollar CDs. D) the S&P 500 index.

______________take positions in futures to reduce their exposure to future movements in interest rates or stock prices. A) Hedgers B) Day traders C) Position traders D) none of the above

__________ trade futures contracts for their own account.

The initial margin of a futures contract is typically percent of a between __________ futures contract’s full value.

Futures exchanges facilitate the trading process and take buy or sell positions on futures contracts.

If the prices of Treasury bonds ________, the value of an existing Treasury bond futures contract should _______

Assume that a T-bill futures contract with a face value of $1 million is purchased at a price of $95.00 per $100 face value. At settlement, the price of T-bills is $95.50. What is the difference between the selling and purchase price of the futures contract?

If speculators believe interest rates will ____________ a T-bill futures, they would consider_____contract today.

Financial futures contracts on U.S. securities are _______ by non-U.S. financial institutions. A) not allowed to be traded B) are rarely desired C) are commonly traded D) A and B

Access all questions and much more by creating a free account

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Interest rate futures are not available on
A) Treasury bonds.
B) Treasury notes.
C) Eurodollar CDs.
D) the S&P 500 index.

______________take positions in futures to reduce their exposure to future movements in interest rates or stock prices.
A) Hedgers
B) Day traders
C) Position traders
D) none of the above

If the prices of Treasury bonds __, the value of an existing Treasury bond futures contract should _

If speculators believe interest rates will ________ a T-bill futures, they would consider_contract today.

Financial futures contracts on U.S. securities are _______ by non-U.S. financial institutions.
A) not allowed to be traded
B) are rarely desired
C) are commonly traded
D) A and B