Chapter 2

Question 1

Future Markets

Answer 1

It means it is exchanged traded not over the counter

Question 2

For the mechanics of the futures market you have

Answer 2

1- Asset
2-Contract size
3-Delivery specifications (where to deliver)
4- Time (Delivery date) also we have the end of date for trading
5- Price Increments
6- Daily Price Limit (Max price it can reach or Min price it can reach) for the day
7- Trading stops at limit up or limit down
8- Position Limit max number of contracts that can be held

Question 3

Convergence, futures and spot converge at the date of expiration

Answer 3

true

Question 4

Future price at expiration data is the sport price

Answer 4

True

Question 5

Margin specification must be met by both buyer and seller

Answer 5

True

Question 6

Marked to Market Daily Settlement

Answer 6

Cash Changes hands Daily

Question 7

Daily settlement is exchange traded specification

Answer 7

True

Question 8

OTC

Answer 8

not a future market

Question 9

OTC

Answer 9

Not exchange traded, it is dealer traded. They are customized because they are last day

Question 10

Open interests number of contracts that are in existence at EOD

Answer 10

True

Question 11

Volume of trading

Answer 11

Volume of contracts that have been traded in that day

Question 12

Delivery

Answer 12

Very few contracts lead to delivery => Usually closed out