Chapter 1 Crunch time

Question 1

Which parties have obligations to a futures contract?

Answer 1

both parties

Question 2

Contracts call for delivery from locations and at times that are specified in…

Answer 2

exchange rules.

Question 3

Contracts may allow for delivery of superior grade for a ____________ or an inferior grade at __________.

Answer 3

premium, discount

Question 4

Places of delivery and acceptable locations must be approved by…

Answer 4

the Exchange.

Question 5

Acceptable locations are commonly referred to as…

Answer 5

“regular for delivery warehouses”

Question 6

_____________ will cause higher liquidity and narrower price spreads.

Answer 6

Speculators

Question 7

__________ execute orders on behalf of others.

Answer 7

Floor brokers

Question 8

Floor traders (AKA “locals”) trade for…

Answer 8

their own account.

Question 9

Becomes the buyer for every seller and seller for every buyer

Answer 9

Clearinghouse

Eliminates counter-party risk!

Question 10

an electronic platform for trading futures and options and is owned and operating by the CME

Answer 10

Globex

Question 11

Electronically traded CME Globex products are interchangeable with

Answer 11

floor traded CME products

Question 12

trade simultaneously on CME Globex electronically and on the trading floor via open outcry

Answer 12

side-by-side contracts

Question 13

A futures contract trade on the ICE (Intercontinental Exchange) in London is interchangeable with…

Answer 13

a futures contract that is traded on a futures exchange in New York