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SPL- Beloy > Exam of Beloy (2nd) > Flashcards

Exam of Beloy (2nd) Flashcards

1
Q

Futures contracts are slower to absorb new information than forward contracts.

A

FALSE

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2
Q

Future contracts are more liquid than forward contracts.

A

TRUE

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3
Q

A contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price is known as:

A

FUTURE CONTRACT

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4
Q

An advantage of a forward contract over a futures contract is that

A

THE TERMS OF THE CONTACT ARE FLEXIBLE

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5
Q

What is not incuded in financial derivatives?

A

GOLD

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6
Q

A primary function of futures markets is to allow investors to transfer risk.

A

TRUE

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7
Q

Forward contracts are used primarily by small firms and individuals because they can be tailored to the needs of those clients.

A

FALSE

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8
Q

When a contract is marked to market?

A

THE MARGIN ACCOUNT OF THE CONTRACT HOLDER IS ADJUSTED

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9
Q

Which of the following is not common to both forward contracts and future contracts?

A

BOTH HAVE THE BUYER TAKING FUTURE DELIVERY OF THE ASSETS IN QUESTION

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10
Q

what is the essential feature(s) of forward contract?

A

ALL OF THE CHOICES

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11
Q

The primary benefit of a future contract is

A

INTERVENTION ON THE TRADERS BEHALF EITH GOV. ( correct answer: Indemnifying…

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12
Q

Which of the following are the types of forward contract?

A

ALL OF THE CHOICES

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13
Q

What is an essential feature(s) of future contract?

A

ALL OF THE CHOICES

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14
Q

A futures contract eliminates uncertainty about the future spot price that an individual can expect to pay for an asset at the time of delivery.

A

TRUE

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15
Q

Future contract is traded on a financial exchange.

A

TRUE

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16
Q

In a forward contract agreement, the quantity of product to be traded, the time of the actual trade and the price are determined at the time of the agreement.

A

TRUE

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17
Q

Which is not a type of future contract?

A

HEDGE CONTRACT

18
Q

A forward contract is not

A

AN AGREEMENT TO BUY A REFRIGERATOE TODAY

19
Q

Which of the following are possible contract periods for forward contracts?

A

ALL OF THE CHOICES

20
Q

Which of the following does the most to reduce default risk for future contract?

A

MARKING TO MARKET

21
Q

Future contract allows fewer delivery options than forward contract.

22
Q

According to future contract, the long position states the

A

PURCHASE OF FUTURE CONTRACT

23
Q

The initial value of a future contract is the price agreed upon in the contract.

23
Q

You sold one oil future contract at P70 per barrel. What would be your profit (loss) at maturity if the oil spot price at that time is P73.12 per barrel? Assume the contract size is 1,000 barrels and there are no transactions costs.

A

3,120 LOSS

24
Q

You sold one oil future contract at P70 per barrel. What would be your profit (loss) at maturity if the oil spot price at that time is P73.12 per barrel? Assume the contract size is 1,000 barrels and there are no transactions costs.

A

3,120 LOSS

25
Q

You purchased one oil future contract at P70 per barrel. What would be your profit (loss) at maturity if the oil spot price at that time is P73.12 per barrel? Assume the contract size is 1,000 barrels and there are no transactions costs.

A

NONE OF THE CHOICES

26
Q

A forward contract specifies immediate delivery for immediate payment.

27
Q

A forward contract

A

HAS MORE CREDIT RISK THAN FUTURES CONTRACT

28
Q

Futures contracts are similar to forward contracts in that they both

A

HAVE VOLATILE PRICE MOVEMENTS

29
Q

A future contract

A

IS MARKED TO MARKET MORE FREQUENTLY THAN A FORWARD

30
Q

All features of a forward contract are standardized, except for price and number of contracts.

31
Q

Which of the following is a similarity between the futures market and the forward market?

A

NONE OF THE CHOICES

32
Q

What does derivatives are used for?

A

MANAGING RISK IN FINANCIAL AND COMMODITIES MARKET

33
Q

Standardized future contracts exist for all the following underlying assets except

A

COMMON STOCKS

34
Q

What is a difference between a forward contract and a future contract?

A

THE PRICE FORWARD IS FIXED, FUTURES IS MARKED TO MARKET DAILY

35
Q

Future contracts are marked to market.

36
Q

Derivatives market involve which participant

A

ALL OF THE CHOICES

37
Q

Forward contracts are traded over-the-counter and are generally not standardized.

38
Q

A contract between two parties to buy or sell an asset at a certain time in future for certain price is known as

A

Forward CONTRACT

39
Q

Futures contracts have less liquidity risk and credit risk than forward contracts

40
Q

Using future contract to transfer price risk is called

SPL- Beloy (4 decks)

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