Quiz
Arec 487- Test 1
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Questions in this quiz (21)
1The margin usually represents 25% to 30% of the value of the underlying futures contract
- ATrue
- BFalse
2The basis is $1 over and the local cash price is $60.00/cwt the futures price is $61.00/cwt
- ATrue
- BFalse
3The open interest is the number of positions that have been closed in the previous trading day
- ATrue
- BFalse
4Hedgers have higher maintenance margins than speculators
- ATrue
- BFalse
5In the live cattle market, as the maturity date of contract approaches, the difference between the cash price and future price keeps the same sign.
- ATrue
- BFalse
6Margin changes during the year
- ATrue
- BFalse
7For storable commodity, the following inequality is (empirically) very rare: Current future price > Current spot price + Storage costs
- ATrue
- BFalse
8If I expect the future price of lean hog contract to be high in the future, I should buy a futures contract in order to profit from this increase.
- ATrue
- BFalse
9Spreaders usually hold many uncovered open position at the same time
- ATrue
- BFalse
10You bought a December lean hog futures contract. You can offset this position by buying another December lean hog contract
- ATrue
- BFalse
11For corn, there is a futures contract for every month of the year
- ATrue
- BFalse
12Buyer and Seller of the same futures contract will both gain if the final price (price at terminal day) is high
- ATrue
- BFalse
13The margin account of a futures contract is settled every week
- ATrue
- BFalse
14Futures contracts provide a pretty good protection against production risks
- ATrue
- BFalse
15The basis is the difference between the cash price and the spot price
- ATrue
- BFalse
16time value + intrinsic value = option premium. This equality always holds, any time
- ATrue
- BFalse
17On a given trading day and for a given commodity, allowed futures price variations are caped at the CBOT
- ATrue
- BFalse
18Strike prices are auctioned off in the trading pit
- ATrue
- BFalse
19The initial margin is usually lower than the maintenance margin
- ATrue
- BFalse
20Scalpers usually have a seat on the exchange
- ATrue
- BFalse
21We are in January 2017, a producer sells October Live cattle futures at $64/cwt. They expect a local basis minus $1.00/cwt. in October 2017, when the cattle will reach slaughter weight, she will sell them on the spot market and offset her contract.
Fill the following table which depicts what would happen depending on several possible futures prices:
- A-8
- B71
- C63
- D63
- E63
- F63
- G63
- H67
- I63
- J62
- K59
- L55
- M-4
- N0
- O1
- P4
- Q8
- R63
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- Description
- Quiz on Arec 487- Test 1, created by Kristen Guelly on 10/02/2022.
- Author
- Kristen Guelly
- Language
- English
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