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14192431 Technical Analysis Chap 20

14192431 Technical Analysis Chap 20

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Published by: subhasishmajumdar on Jan 29, 2010
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09/06/2010

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 Chapter TwentyFutures257 
FUTURES PREPARED BYSUBHASISHMAJUMDAR……………………………………………………..Multiple Choice Questions
Understanding Futures Markets
1.
 
Spot markets are:a.
 
for a limited number of commodities.
b.
 
for immediate delivery
c.
 
for future delivery.d.
 
markets designed to attract speculators.2.
 
A forward contract differs from a futures contract in that:a.
 
a forward contract is for a shorter period of time.b.
 
a forward contract does not specify the selling price.
c.
 
a forward contract does specify the selling price.
d.
 
a forward contract is non-binding.3.
 
Futures contracts are regulated by the:a.
 
Securities Exchange Commission.b.
 
National Association of Security Dealers.c.
 
National Association of Commodity Dealers.
d.
 
Commodity Futures Trading Commission.
4. A futures contract isa. a nonnegotiable, nonmarketable instrument.b. a security, like stocks and bonds.
c. a standardized transferable agreement providing for the deferreddelivery of a specified traded quantity of a commodity.
d. not a legal contract, and therefore its terms can be changed .5. Futures contracts were first traded ona. stock indexes.b. foreign currencies.
c. commodities.
d. government bonds.6. Which of the following variables is
not
established on a futures contract?
 
 Chapter TwentyFutures258
a. contract size
b. price
c. delivery dated. specified grade
The Structure of Futures Markets
7. Futures trade on the:a.
 
NYSEb. over-the-counter market.
c. futures exchanges.
e.
 
options exchanges.8. Futures exchange members:a.
 
trade strictly for their own accounts.b.
 
trade strictly for others.
c.
 
can trade for their own accounts or for others.
d.
 
are all controlled by commodity firms.9. On the other side of every futures transaction is:a.
 
the dealer.b.
 
the futures exchange.c.
 
the commodity producer.
d.
 
the clearinghouse.
10. An appealing feature of options on futures contracts is that:a.
 
they have longer terms until expiration.
b.
 
the purchaser has limited liability.
c.
 
losses virtually never occur.d.
 
margin calls occur less frequently.
The Mechanics of Trading
11. In the case of a futures contract, buyers can settle their positionsa. only by taking delivery.b. only by arranging an offsetting contract.
c. either by delivery or offset.
d. by a combination of delivery and offset.12. The typical method of settling a futures contract is by:a. arbitrage.b. delivery
 
 Chapter TwentyFutures259
 
c. offset.
d. hedging.13. When trading futures, margina. is seldom used.b. indicates that credit is being extended.c. is a down payment.
d. in effect, is a performance bond.
14. Which of the following is a characteristic of futures contracts? They
a. are marked to the market daily.
b. can be sold short only on an uptick.c. are handled by specialists on futures exchanges.d. have no daily price limits.15. The initial margin required for futures tradinga. is only put up by the seller.b. is only put up by the buyer.c. can be put up by either party, whoever initiates the transaction.
d. must be put up by both the buyer and the seller.
16. Of the following statements about futures trading, which one isINCORRECT?a. There are no specialists on futures exchanges.b. All futures contracts are eligible for margin trading.c. Trading is halted for the day if the prices reach the daily limit.
d. The uptick rule applies to the shorting of futures contracts.
17. Which of the following features is NOT similar between stock and futurestrading?a. Buying and selling mechanicsb. Existence of highly organized exchanges
c. The charging of interest on margin trades
d. The ability of only members to trade on the floor18. The cumulative number of futures contracts that are not offset at anypoint in time is called:a.
 
margin.
b.
 
open interest.
c.
 
hedged position.d.
 
marked to the market position.

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