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QUESTION 1 Which entity in the United States takes primary responsibility for regulating futures market? a

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QUESTION 1

1. Which entity in the United States takes primary responsibility for regulating futures market?

	a.	Federal Reserve Board
	b.	Commodities Futures Trading Commission (CFTC)
	c.	Security and Exchange Commission (SEC)
	d.	US Treasury

10 points   

QUESTION 2

1. 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.

	a.	$0
	b.	$1,000
	c.	$3,000
	d.	$4,000

10 points   

QUESTION 3

1. An investor has exchange-traded put options to sell 100 shares for $20. There is a $1 cash dividend. Which of the following is then the position of the investor?

	a.	The investor has put options to sell 100 shares for $20.
	b.	The investor has put options to sell 100 shares for $19.
	c.	The investor has put options to sell 105 shares for $19.
	d.	The investor has put options to sell 105 shares for $19.05.

10 points   

QUESTION 4

1. 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?

	a.	$1,800
	b.	$3,300
	c.	$2,200
	d.	$3,700

10 points   

QUESTION 5

1. Consider a put option and a call option with the same strike price and time to maturity. Which of the following is true?

	a.	It is possible for both options to be in the money.
	b.	It is possible for both options to be out of the money.
	c.	One of the options must be in the money.
	d.	One of the options must be either in the money or at the money.

10 points   

QUESTION 6

1. Which of the following is true?

	a.	A long call is the same as a short put.
	b.	A short call is the same as a long put.
	c.	A call on a stock plus a stock is the same as a put.
	d.	None of the above

10 points   

QUESTION 7

1. Which of the following is an example of an option class?

	a.	All calls on a certain stock
	b.	All calls with a particular strike price on a certain stock
	c.	All calls with a particular time to maturity on a certain stock
	d.	All calls with a particular time to maturity and strike price on a certain stock

10 points   

QUESTION 8

1. An investor has exchange-traded put options to sell 100 shares for $20. There is 25% stock dividend. Which of the following is the position of the investor after the stock dividend?

	a.	Put options to sell 100 shares for $20
	b.	Put options to sell 75 shares for $25
	c.	Put options to sell 125 shares for $15
	d.	Put options to sell 125 shares for $16

10 points   

QUESTION 9

1. Margin accounts have the effect of

	a.	Reducing the risk of one party regretting the deal and backing out
	b.	Ensuring funds are available to pay traders when they make a profit
	c.	Reducing systemic risk due to collapse of futures markets
	d.	All of the above

10 points   

QUESTION 10

1. With bilateral clearing, the number of agreements between four dealers, who trade with each other, is

	a.	12
	b.	1
	c.	6
	d.	2