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WorksheetsInvestment & Portfolio Management - Finals Quiz 1
Total questions: 10
Worksheet time: 5mins
If the spot price is expected to change, a trader can engage in speculation through forwards.
True
False
Hedging through the use of (a) contracts reduces risk by fixing a delivery or purchase price.
A financial future can also be formed by converting an index into a monetary equivalent.
True
False
Commodity futures are trades in actual commodities.
True
False
In a commodity contract, there is also a commitment to trade and agreed quantity at a fixed price at a future date.
True
False
A forward is settled on the delivery date.
True
False
(a) are contracts drawn up on the basis of some future price or index, such as the interest rate or a stock index.
The advantage of a futures contract is that it fixes the price and guards against price changes
True
False
Commodity futures were first introduced onto an exchange by the Chicago Board of Trade in the 1860s to assist with the reduction in trading risk for the (a) industry.
A strategy of hedging can be used to guard against unfavourable movements in the product price.
True
False
