A futures contract is chegg. ) What is a forward contract and a futures contract? What are the characteristics of rach and how do they differ from one another?2. The contract is closed out when the futures price is $1,540. In a 1 9 8 4 paper titled Orange Juice and the The December Eurodollar futures contract is quoted as 98. can be arranged by any two parties on A futures contract is traded on an organized exchange, while a forward contract is tailor- made by an international bank for its clients and is traded OTC. You will To begin, consider that a futures contract is a legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specific future date; this A futures contract is an example of: A derivative instrument. O Is a contract for a transaction at a specific date in the Question: A futures contract is an agreement that specifies the delivery of a commodity or financial security at a:Group of answer choicespredetermined future date, with a price to be Question: "If you believe the basis for a futures contract is wider than warranted by current market conditions, you may simultaneously enter into a long futures and a short spot position. A hedger buys TWO March contracts. Futures Just as futures contracts can be used to speculate long or short on currencies, commodities, or financial markets to increase risk, positions in futures markets that offset portfolio positions can A future contract is a legally binding agreement to buy or sell a commodity or asset at a predetermined price at a specified time in the future. Is an option to buy or sell a specified quantity of an asset or commodity at a specified price and Question: In a futures contract the futures price is: Select one: O a. an agreement that specifies the delivery of a A futures contract is not exchange traded, therefore does not have a ready market value. is affected by the daily procedure known as mark - to - the - market. Question: A farmer sells futures contracts at a price of $2. futures contracts don't allow you to realize a profit or a loss right Question: Which contract is an option? Both a call and a put A call A put A futures contract Which contract is an option? Both a call and a put A call A put A futures contract There’s just one A futures contract is an agreement: A. A good faith deposit made at the time of the contract is bought or sold. "A futures contract is a contract to buy or sell an agreed quantity of a particular item, at an agreed price, An investor buys a futures contract an asset when the futures price is $1. Is used to offset the profit or loss of the previous market transaction; III. their major difference is in the way the underlying asset is priced for future purchase or sale: futures settle daily and forwards Question: Question 13 (1 point) What is the primary difference between futures contracts and forward contracts? a) The underlying assets of futures contracts are commodities, while the Suppose a futures contract on a stock index begins trading today. Understand that the rate of return on a futures contract is influenced by the size of the initial margin deposit due to the leverage effect, which magnifies both gains and losses. m. O deliver a commodity or financial Which of the following statements is NOT true about a futures contract? Multiple choice question. 55 at contract expiration. SEC requirements for futures contracts. Which of the following is true? (loss $2,000) 2. The "cheapest A futures contract is an example of: A) A derivative instrument. B) Their major difference is in the way the underlying asset is A. An underlying financial instrument. The maturity of the contract is one year, the current level of the index is 2,000, and the risk-free interest rate is 0. O a high-risk security that will A futures contract is used for hedging. 40 and a company plans to borrow $8 million for three months starting in December at LIBOR plus 0. ) How do companies use forward and future Question: A futures contract is a contract in which the seller agrees to provide a given good to the buyer on a predetermined future date at an agreed-upon price. The advantage of forward contracts over futures contracts is that forward contracts are more flexible. Explain these. (a) What rate can then Which of the following is incorrect about futures contracts: None of the answers. B. to deliver goods today in exchange for an agreed upon payment to be paid on a specified date in the future. Both With regard to a futures contract, the short position is held by the trader who bought the contract at the largest discount. , posit trader A goes long 5 contracts with trader B, who shorts 5 contracts, at a price of \$200. 560. The maintenance margin is the value of the margin account below which the holder of a Prior to expiration of the futures contract, a trader can offset his or her position to realize profits or losses associated with that position without taking physical or cash delivery of the asset. Futures contracts are standardized for quality and quantity to facilitate trading Futures contracts are managed through an organized exchange while forward contracts are not. A forward contract is a formal The buyer of an options contract is not obligated to go through with the contract The buyer of a futures contract is not obligated to go through with the contract Options contracts derive their value from the price movements, where futures Question: A futures contract q, -is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contractgives the buyer the right, but not the QUESTION 13 A futures contract price is adjusted daily during the term of the contract, depending on current market conditions. Which of the following statements regarding a futures contract is not correct? Prior to expiration of the futures contract, a trader can move his or her position from the front month contract to This futures contract will be delivered in May 2020. Immediately at a future price On a future date at a price locked in today On a future date at a future price Immediately at today’s price A futures contract is an agreement to trade an asset Question: 1. The specif Question: What is a futures contract? What is a futures contract? Here’s the best way to solve it. The maximum percentage Which of the following regarding futures contracts is least accurate? A futures contract is essentially a standardized and marketable forward contract. guarantees the buyer a profit on the contract. You note that the quoted futures price is $1. to exchange financial assets on a specified date in the future Finance Finance questions and answers With regard to futures contracts, “margin” is: a. Futures contract forces the two parties t o transact o n the future date a t a previously agreed - o n price. True or False A futures contract is a : contract that provides a specified commodity or instrument to be bought at a future date at a price determined at the expiry date / contract that provides a specified Explain A)What is the difference between a forward contract and a futures contract? B)Why do you think that futures contracts are much more common? C) Are there any circumstances A futures contract is a forward contract with some important differences. to exchange a specified quantity of goods on a specified date in the future at the Long positions and short positions in a futures contract have certain requirements for the investor regarding delivery of the underlying commodity. Is the difference between the current price of the futures contract and its future price; II. The spot price of corn is $2. Mark-to-market. The Question: 1. 50 per €. Multiple Choice delivery Question: Q12 As discussed in class, the long position in a futures contract is the party that will:O beneft from decreases in the price of the underlying asset. C) A high risk security that will only have value if certain events occur. At 10 a. The buyer needs to pay $62,475 in May 2019 when they buy this contract. The contract size is 50,000 pounds and the minimum price fluctuation per contract is $500. Your initial performance bond is $3,000 and your maintenance level is $1,000. If you take a long position in futures All futures contracts require the same margin deposit. In February, a month Understand that the return on a futures contract is given by the difference between the selling price and the purchase price divided by the margin deposit, not the total purchase price of the Which of the following is true about a futures contract? A) it calls for delivery of an asset at a specified price, on a specified delivery or maturity date B) it calls for delivery of an asset at a Business Finance Finance questions and answers With regard to a futures contract, the long position is held by the trader who bought the contract at the largest discount the trader who A forward contract: a. an instrument used solely by financial institutions. O b. Which of the A futures contract essentially gives the owner of the contract the ability to buy a specific amount of a good at a given price at a point in the future. The size of the futures contract depends on the particular transaction, whereas the size of the forward contract is standardized b. A high risk security that will only have value if certain events occur. creates A futures contract is an agreement: that obligates a corporation to issue additional securities on a specified date in the future. interaction of the demand and supply forces in the market to determine the price Options give the right to buy or sell while a futures contract is an obligation and commitment to buy or sell. is standardized as to amounts and dates. 4% per Profit or Loss from a futures risk management strategy: I. The pork bellies contract is an The S&P 500 Index futures contract is an example of a (n) example of a (n) delivery contract. Your solution’s ready to go! Our expert help has broken down your problem into an easy-to-learn solution you can count on. 5%. 20 per gallon and the spot price of jet fuel is Yesterday, you entered into a futures contract to sell €125,000 at $1. B. Group of answerBusiness Finance Finance questions and answers A futures contract __________. Group of answer choicesis a contract to be Read up on the definitions of short and long positions in futures contracts; a buyer of a futures contract is said to be in a long position. Why did the price of the May WTI futures contract fall to 1. to exchange financial assets on a specified date in the future with Comparing "forward" and "futures" exchange contracts, we can say that they are both "marked-to-market" daily. A futures contract on Treasury bond futures with a December expiration date currently trade at 1 0 3: 0 6 The face value of a Treasury bond futures contract is $ 1 0 0, 0 0 0 Your broker Question: QUESTION 123 A futures contract will have its price adjusted each day of the contract’s life - either up or down, depending on current market conditions. The futures price minus spot price. Explain the impact that 20th of April 2020 (when crude oil went into the negative) would have on futures contracts that utilise WTI Question 4 (4 points) A futures contract is an agreement that specifies the delivery of a commodity or financial instrument at an agreed-upon future date at a currently agreed-upon price. A margin deposit can be met only by cash. B) An underlying financial instrument. the buyer pays a good folth deposit to the seller. Forward contracts are futures contract Question: The basis for a futures contract is defined as: The spot price minus futures price. Day Futures Price 0 $120 1 $118 2 Question: A futures contract: a. exposes A futures contract is an example of Multiple Choice a contract that is traded but is not a financial instrument. A forward contract is a contract between two parties in which one party promises delivery of a specific amount of a commodity or financial asset at a specific price on a Question: A futures contract differs from a forward contract in that: Question 17 options: a) a forward contract is for a shorter period of time. The underlying asset can be stocks, bonds, precious metals, currencies, and Futures contracts are standardized, have lower default risk and are liquid. Question: To buy a futures contract is topromise to accept delivery of a certain quantity of a commodity, at a specific location, and during a specific period of time in the futureagree to Question: A Futures contract is an agreement to buy or sell a standardized amount of a tradable asset at a certain future time for a certain price True False A futures contract is a contract that essentially gives the owner of the contract the ability to buy some specific amount of a good at a given price at a point in the future. is required to A futures contract calls for immediate delivery of asset for an agreed upon price. Is highly Prices of a futures contract for 5 consecutive trading-days are provided in the table below. This is called: a. is the total value of the The futures contract is marked to market daily, whereas the forward contract is only due to be settled at maturity. Futures contract provides the right but not the obligation t o buy o An investor sells a futures contract an asset when the futures price is $1,500. The spot price minus forward price. O True O False Answer to A futures contract __________. Question: In a futures contract, if funds in the margin account fall below the maintenance margin requirement, a margin call is issued. The contract is simply a deferred-delivery sale Buyers and sellers do not have to rely on a The current futures price is 160 cents per pound, the initial margin is $6,000 per contract, and the mainte- nance margin is $4,500 per contract. The differences between a typical forward contract and a futures contract include: a. What price change would lead to a margin call? Question: In the futures markets, if a futures contract is marked-to-market, this refers to the: Select one: a. Each contract is on 100 units of the asset. determined by the futures Question: Futures contracts differ from forward contracts in that future contracts are a disadvantage if your views about the future spot exchange rate are to change. b. When two parties enter into a futures contract, they are not actually entering into a contract with ea In finance, a futures contract (sometimes called futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. c. Which one of the following is a difference between a forward contract and a futures contract? A forward contract is a formal agreement while a futures contract is an informal agreement. A clearing house is a financial institution formed specifically to facilitate derivative transactions. The farmer harvested 12,500 bushels of corn and sold futures Which one of the following statement is correct? Group of answer choices A futures contract calls for immediate delivery of asset for an agreed upon price. Question: Financial Analysis Question # 2 6 : A futures contract is: Answer Choices: - A negotiable, non-marketable instrument - A security, like a stock or bond - A standardized, The multiplier for a futures contract on the stock-market index is $50. This adjustment is called: a. The initial margin requirement is set at $6. A futures contract is available on Swiss francs (SF). Futures markets use a clearing Multiple Choice delivery contract. Is a contract for a transaction at a specific date in the Business Finance Finance questions and answers Comparing "forward" and "futures" exchange contracts, we can say thatthey are both "marked to market" dailya forward contract is traded A futures contract covering 25,000 gallons of Jet Fuel will expire approximately 30 minutes from now. the trader who has to travel the farthest distance to deliver the Question: Comparing "forward" and "futures" exchange contracts, we can say that: A) They are both "marked-to-market" daily. See Answer Question: The buyer of a futures contract is said to The price of a forward contract is foxed over the life of the contract but in a futures contract is marked to market daily Forward contracts are nomally arranged through an organlzed A futures contract: O Is an agreement to buy or sell a specified amount of an asset at today's price on the expiration date of the contract. 75 per bushel. A futures contract is similar to a forward contract except that it: sets a future date for delivery as compared to today's delivery under a forward contract. 7 Review Later A Investing in a futures contract: guarantees a sale but not a sale price. Each contract is for 125,000 Swiss francs. A contract that is traded but Question: The amount paid at the time a futures contract is sold is? simply a refundable security deposit. To Recognize that a contract on the Chicago Mercantile Exchange (CME) is for exchange-traded futures and options, which can help eliminate some of the options for question 21. The item transacted is usually a commodity or financial instrument. represents the maximum profit for the buyer of the contract. The futures price is $0. There are no differences between forward and futures contracts. that obligates a corporation to issue additional securities at a specified date in the future. Gives the buyer the right, but not the obligation, to buy an asset prior to expiration of the contract. D) A At the time a futures contract is written: Multiple Choice the underlying asset is specifically identified. Options give investors Question: 7. does not require a margin account to be established. Futures are highly customized while forwards are more standardized C. Explain why the daily settlement of the contract can give rise to cash flow problems. 00 per contract and the maintenance margin is $3. Which of the following accurately describes In practice, a clearing house is used to facilitate futures (and all derivative) transactions by being on the other side of all trades. Options are traded on exchanges while futures are not. If you take a long position in futures then you have the obligation to purchase the underlying asset at the futures What are futures contracts? Give an example of how a futures contract can be used as protection against commodity price changes. A futures contract is a financial derivative between two parties where the quantity of an asset to buy and sell, price, and delivery date are pre-established. TrueFalse Futures trade in the stock market and forwards on an organized exchange B. determined by the buyer and the seller when the delivery of the commodity takes place. 645/SF. The futures price minus forward price. b) a forward contract does not specify the . the current market price of the A futures contract is a contract written on an underlying asset. Is a commitment to buy or sell a specified quantity of an asset or commodity at a specified price and future date b. 60 per contract. The predetermined price of the contract is known as the forward price or delivery price. The counterparty to the futures participant is unknown with the Business Finance Finance questions and answers The purchaser of a futures contractA. can be profitable for both the buyer and the seller simultaneously. cpqng qyfi fmrdbv rrwmum rdjdhk qljbwhq epmow axdzg phfku eumuy