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Which of the following is true

• Both forward and futures contracts are traded on exchanges.

• Forward contracts are traded on exchanges, but futures contracts are not.

• Futures contracts are traded on exchanges, but forward contracts are not.

• Neither futures contracts nor forward contracts are traded on exchanges.

Which of the following is NOT true

• Futures contracts nearly always last longer than forward contracts

• Futures contracts are standardized; forward contracts are not.

• Delivery or final cash settlement usually takes place with forward contracts; the same is not true of futures contracts.

• Forward contracts usually have one specified delivery date; futures contract often have a range of delivery dates.

In the corn futures contract a number of different types of corn can be delivered (with price adjustments specified by the exchange) and there are a number of different delivery locations. Which of the following is true

• This flexibility tends increase the futures price.

• This flexibility tends decrease the futures price.

• This flexibility may increase and may decrease the futures price.

• This flexibility has no effect on the futures price

A company enters into a short futures contract to sell 50,000 units of a commodity for 70 cents per unit. The initial margin is $4,000 and the maintenance margin is $3,000. What is the futures price per unit above which there will be a margin call?

• 78 cents

• 76 cents

• 74 cents

• 72 cents

One futures contract is traded where both the long and short parties are closing out existing positions. What is the resultant change in the open interest?

• No change

• Decrease by one

• Decrease by two

• Increase by one

Who initiates delivery in a corn futures contract

• The party with the long position

• The party with the short position

• Either party

• The exchange

You sell one December futures contracts when the futures price is $1,010 per unit. Each contract is on 100 units and the initial margin per contract that you provide is $2,000. The maintenance margin per contract is $1,500. During the next day the futures price rises to $1,012 per unit. What is the balance of your margin account at the end of the day?

• $1,800

• $3,300

• $2,200

• $3,700

A hedger takes a long position in a futures contract on a commodity on November 1, 2012 to hedge an exposure on March 1, 2013. The initial futures price is $60. On December 31, 2012 the futures price is $61. On March 1, 2013 it is $64. The contract is closed out on March 1, 2013. What gain is recognized in the accounting year January 1 to December 31, 2013? Each contract is on 1000 units of the commodity.

• $0

• $1,000

• $3,000

• $4,000

A speculator takes a long position in a futures contract on a commodity on November 1, 2012 to hedge an exposure on March 1, 2013. The initial futures price is $60. On December 31, 2012 the futures price is $61. On March 1, 2013 it is $64. The contract is closed out on March 1, 2013. What gain is recognized in the accounting year January 1 to December 31, 2013? Each contract is on 1000 units of the commodity.

• $0

• $1,000

• $3,000

• $4,000

The frequency with which futures margin accounts are adjusted for gains and losses is

• Daily

• Weekly

• Monthly

• Quarterly