STAT3905/3618 Chapter 2

The P/L of a short position in a forward contract is

Forward contracts are traded on

• exchange markets

• OTC markets

Which way of settlement is more common for futures contracts?

• Physical delivery

• Cash settlement

Which of the following is NOT a mechanism used by an exchange to reduce default risk?

• Initial margin requirement

• Mark-to-market

• Cash settlement

• Maintenance margin requirement

To buy an asset in the future but want to lock in the price today, you can use

• long forward

• short forward

• True

• False

• -80

• -3

• 3

• 83

The value of a futures contract can change over time.

• True

• False

The potential loss of a short position in futures is

• limited

• unlimited

• 2

• 3

• 5