If you are the buyer of a futures contract you are chegg. Question: A buyer of a futures contract: a. Question: The buyer of a futures contract is said to have a position in futures. By using an offsetting contract onlyc. IV. The contract buyer is short on the position. Is said to be short futures b. uses specified settle prices that vary with the type of commodity. How does a call option protect a buyer? Explain. I and Investing in a futures contract: guarantees a sale but not a sale price. Under a Put option contract, if the market value (price) of the underlying asset goes ABOVE the strike (exercise) price, the option holder can exercise his/her right to buy the asset to the option holder's Question: Who guarantees that a futures contract will be fulfilled? Multiple Choice The seller The exchange The broker The buyer Nobody Who guarantees that a futures contract will be fulfilled? Multiple Choice The seller The exchange The broker The buyer Nobody There are 2 steps to solve this one. 3. Q4. At the time a futures contract is written: Multiple Choice the underlying asset is specifically identified. b A futures contract calls for immediate delivery of asset for an agreed upon price. e. Futures contracts specify both the quantity of the item. Assumes the short position b. takes the long position. One share or fractional share of stocks in the index per contract for cash paid by the buyer b. What is true below AND suggests you might prefer to hedge your needs using ONLY FUTURES contracts (i. Your solution’s ready to go! Our expert help has broken down your problem into an easy-to-learn solution you can count on. Cash difference of the contract between buy and settlement dates in lieu of the value c. allow the seller to deliver any day during the delivery month. a. 2. Over the subsequent four trading days, gold settles at $1,495, $1,490, $1,505, and $1,515, Question: You are a buyer for a manufacturer of chocolates and candies and have been told to hedge the cocoa and sugar needed for production of your upcoming orders. owner) of an option is required to deposit margin money if the seller of the option decides to exercise it. Using either delivery or offsetd. 1) What does it mean to "close out" a futures position? If you take a long futures position, and you forget to close out, what are you facing? Question: Which of the following is (are) correct statements about the buyer of a futures contract?I. Question: The terms of the futures contract such as the quality, quantity and delivery date of the commodity () A. takes the short position. The buyer of an option contract can lose at most the premium paid to acquire the option contract. Question: 1. directly with known Question: 1. A futures contract can be traded on a futures exchange, Which of the following combinations (true/false) is correct? The buyer of an options contract is not obligated to go through with the contract The buyer of a futures contract is not obligated to go through with the contract Options contracts derive their value from the price movements, where futures contracts are based on time value of money Futures contracts derive Show transcribed image text Question: When purchasing a futures contract, the buyer: Multiple Choice agrees to pay the seller at a later date, based on the asset's future price None of these are true must pay the seller a set amount, regardless of what the future price turns out to be. businesses to obtain useful information about possible future disruptions to input costs. in a futures contract, the buyer and seller have symmetric rights, whereas in an options contract, the buyer and seller have asymmetric rights. Multiple Choice II, III Question: 1. the current futures price b. III. Buy a Contract - the buyer of a futures contract agrees to acc è pt delivery of a specified commodity on a specified future date at a price agreed upon on day of the contract. Designated by buyers and sellers C. can be offset by taking an opposing position. Forward and futures contracts are derivatives arrangements that involve two parties who agree to buy or sell a specific asset at a set price by a certain date in the future. assumes very little risk that the asset's future price will fluctuate. Only designated by the buyer D. call option; buyput option; sellcall option; sellput option; buyIn an interest rate swap, the buyer and seller exchange payments on the same and based on the same q,dates; interest Question: 1. Allowing the seller to deliver any day during the delivery month. Business Finance Finance questions and answers Please show your work to have full credit for calculating questions. Which of the following statements are true about futures contracts? Check all that apply: They are an agreement to buy or sell a specified amount of an asset at a specified date and for an agreed-upon price. The buyer of the contract has a short position. Maintenance price d. Strike price. the amount of premium an option holder pays to the writer c. IV. the buyer pays a good folth deposit to the seller. Which of the following statements is true? a. Margins are financial guarantees required of both buyers and sellers of futures contracts to ensure that they fulfill their futures contract obligations. Assumes the long position May not sell the contract without the permission of the original seller d. Requiring contract fulfillment by the two originating parties. II. B. Question: Unlike forward contracts, futures contracts: a. II. O None of the other answer choices are correct O The buyer in a futures contract The buyer of the contract has the right to either accept delivery or cancel the contract. - Speculating: This means you are taking a position in the futures market with the aim of making a profit from price movements. How much does the trader gain or lose totally if 1. The contract buyer wants the price of the item to increase. establishes the delivery price based on the selling price of the futures contract. Designated by intermediaries and dealers B. A call buyer is obliged to buy the underlying asset at the exercise price. A futures contract will allow:' Futures margin requirements are set by the exchanges and are typically only 2 to 10 percent of the full value of the futures contract. has the obligation to deliver the underlying financial instrument at the specified future Question: When purchasing a futures contract, the buyer: Multiple Choice must pay the seller a set amount, regardless of what the future price turns out to be. Which of the following statements are TRUE regarding Futures and Options contracts? 1. the Buyer must hold the contract until maturity. A long position in futures benefit from price decrease. assumes very little risk that the asset's future price will fluctuate Question: In the futures markets the buyer of a financial futures contract: Select one: a. You cannot avoid accepting delivery once you purchase a futures contract. Futures contracts generally grant the buyer the option to accept only a portion of the contract. A contract made on S&P futures requires the seller to provide what to the buyer on the settlement date? a. 1) What does it mean to "close out" a futures position? If you take a long futures position, and you forget to close out, what are you facing? Study with Quizlet and memorize flashcards containing terms like Financial derivatives include futures; forward contracts; options, A contract that requires the investor to buy securities on a future date is called a long contract, A contract that requires the investor to sell securities on a future date is called a short contract and more. I and II only II and IV only I, II and III only I, II, Business Economics Economics questions and answers The purchase of a futures contract gives the buyer _________. В. 1. Futures contracts can be closed out by entering a reverse trade. businesses to use opfind ritunity costs to calculate Question: The buyer of a futures contract Question options: A. The current exchange rate is also 100 Yen/$. The interest rate futures contract allows the buyer and seller to lock in the price of the interest-bearing asset for a future date c. C. The price at which a futures contract is set at the end of the day is the a. Hedging involves taking a position in the futures market that offsets an existing risk in the spot market. D. short position b. has to record the contract with the clearing house. The seller of a futures contract has the option to deliver cash in an amount equal to the contract value in lieu of the underlying asset. A futures contract is negotiated between a buyer and seller and can be tailored to the buyer's particular requirements. Finance Finance questions and answers Which one of the following statements is correct?Question 3 options:Futures contracts can be closed out only by contract buyers. Futures contracts can be cancelled by either the buyer or the seller with 10 days notice to the other party. The buyer of a futures contract is said to be long futures. Stock price. b. exchange-traded, standardized) rather than using FORWARD contracts (i. d. in a futures contract, the buyer and seller have asymmetric rights, whereas in an options Forwards and Futures contracts. O Is a contract for a transaction at a specific date in the future by the buyer and the seller of the asset. Futures contracts are marked-to-market daily. Your solution’s ready to go! Our expert help has broken down your problem into an easy-to-learn solution you can count on. Cost and convenience are the two key considerations when establishing the settlement procedures. While a buyer of a futures contract could be hedging, the act of buying a futures contract itself doesn't automatically mean they are hedging. has the obligation to deliver the underlying financial instrument at the specified future A futures contract on Japanese Yen where buyers and sellers agree to make or take delivery of Yen at 100 Yen/$ expires in 3 months. II onlyb. Question: You bought one Eurodollar futures contract, if interest rate declines, you will have a gain loss Question: Which of the following is (are) correct statements about the buyer of a futures contract?I. is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contract. Both parties (buyer and seller) are protected from future price fluctuations of the asset. This margin must be maintained as each day the counterparties in the futures are marked to market. businesses to use opfind ritunity costs to calculate Question: What position does the buyer of a futures contract take in the cash market? Takes a short position in the cash market because the contract requires delivery of the underlying asset on the expiry date. Futures contracts are highly risky and involve speculation. The buyer of an options contract is not obligated to go through with the contract The buyer of a futures contract is not obligated to go through with the contract Options contracts derive their value from the price movements, where futures contracts are based on time value of money Futures contracts derive Show transcribed image text Your solution’s ready to go! Our expert help has broken down your problem into an easy-to-learn solution you can count on. guarantees the buyer a profit on the contract. provide an option for the buyer, rather than an obligation. They gives the buyer a right but not an obligation to buy a specified amount of an asset at a specified date and price. position, and the seller of a futures contract is said to have a margined; long short; long long; long long; short short; short Business Finance Finance questions and answers A futures contractMultiple Choiceis an agreement to buy or sell a specified amount of an asset at the spot price on the expiration date of the contract. Group of answerBusiness Finance Finance questions and answers A futures contract __________. 3) True or False: If an option owner exercises an option, the writer (f. There are two parties to every futures contract - the seller of the contract, who agrees to deliver the asset at the specified time in the future, and the buyer of the contract, who agrees to pay a fixed price and take delivery of the asset. Futures contracts specify both the quantity and the quality of the underlying asset. arbitrageur d. Question: QUESTION 14 4. If you take a long position in futures then you have the obligation to purchase the underlying asset at the futures price. Allowing the parties to negotiate the contract size. has the obligation to deliver the underlying financial instrument at the specified future date. Consider the following two statements concerning futures contracts. agrees to pay the seller at a later date, based Question: A futures contract grants the buyer the option to either buy or sell a specified amount of a commodity. The buyer must hold the contract until maturity. The buyer of the contract must deliver the underlying asset on the settlement date. May 24, 2023 · So, if you are the buyer of a futures contract, you are not short. Question: The buyer of a futures contract is regarded as a. The buyer of the futures contract a. The current price of gold is $400 per ounce. Agrees to receive the underlying futures price or to deliver the underlying asset c. Business Finance Finance questions and answers When purchasing a futures contract, the buyerMultiple Choicemust pay the selier a set amount, regardless of what the future price turns out to be. Question: You are long 10 gold futures contracts, established at an initial settle price of $1,500 per ounce, where each contract represents 100 troy ounces. It is called a call option. Agrees to pay the underlying futures price or take delivery of the underlying asset d. Answer to A futures contract __________. An option that gives the buyer the right but not the obligation to purchase (go long) the underlying futures contract at the strike price on or before the expiration date of the option? call option put option Business Finance Finance questions and answers : Select the correct answer and explain A futures contract: a. When market participants have rational expectations The information they use Question: In the futures markets the buyer of a financial futures contract: Select one: a. A buyer of a put option has the right but not the obligation to take a long position in a specific futures contract, at a given strike price, over a specified time period. The buyer can liquidate the position with an offsetting transaction. is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contract. Part A ( 10 points Total: 2 points each) 1) True or False: If you purchase a call option, then you are required to buy a futures contract at some point in the future 2) True or False: The buyer (le. grants the buyer the right to either buy or sell a specified amount of a commodity. long position c. the price designated in the option, where a buyer has the right to assume a long or short futures position d. True O False Show transcribed image text Here’s the best way to solve it. c. Both the buyer and the seller of the contract are obligated to fulfill their duties as outlined in the futures contract. gives the buyer the right, but not the obligation, to buy an asset Question: Which of the following characteristics apply to futures contracts? I. creates a gain for one party without causing a loss for the other party. assumes the long position C. knows that he or she will receive dividends consistently over the period of the contract. A 2. e. determined by open outcry in a trading pit 2. may not sell the contract without the permission of the original seller. in a futures contract, the buyer and seller have asymmetric rights, whereas in an options contract the buyer and writer have symmetric rights. Its may options are about to expire. can be profitable for both the buyer and the seller simultaneously. Designated by the exchange Solution Share Share True Explanation: In futures trading, the buyer of a futures contract is said to have a long positi The purchase of a futures contract gives the buyer Multiple Choice the right to buy an item at a specified price the right to sell an item at a specified price A futures contract: O Is an agreement to buy or sell a specified amount of an asset at today's price on the expiration date of the contract. call option. Question: One distinguishing difference between the buyer of a futures contract and the buyer of an option contract is that the futures buyer: A) Pays a much higher premium than option buyers B) Has an obligation to purchase, not a choice C) Can lose no more than initial premium D) Has increased rather than reduced risk Question: 7. the current market price of the underlying asset becomes the contract price, the current market price of the underlying asset must be less than the agreed upon futures price. The contract expires in 3 months. I and The buyer of the contract has the right to either accept delivery or cancel the contract. has the obligation to deliver the underlying financial asset at the specified future date. е, СС. See Answer The main advantage of using options on futures contracts rather than the futures contracts themselves is that interest-rate risk is controlled while preserving the possibility of gains. Great for hedging and, while they both have the same definition, that is, buyers/sellers have an obligation to buy/sell specific quantities of a specific product on a specific date at a specific price, each provides a hedge in completely different ways. с. Question: When we contrast futures with options contracts, we can say that: Select one: a. establishes the delivery price based on the selling price of the futures Question: In the deliverable futures contract the underlying asset must be transferred to buyer at maturity. All futures contracts are physically settled, meaning the underlying asset is delivered to the buyer. Question: For futures contracts, buyers can settle their positions by:Select one:a. Group of answer choicesis a contract to be signed in the future by the buyer and the seller of a commodityis an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contractis an agreement to buy or sell a Question: Futures contracts contrast with forward contracts by: Providing an option for the buyer rather than an obligation. True False A seller (writer) of a call option is considered short in the options market. If the value of Yen rises and continues to rise every day over the 3 month period, then when the contract is settled, the buyer will_____and the seller will _____. If you expect the Australian dollars to depreciate, it would be appropriate to buy futures contracts Question: The buyer of a futures contractSelect one:A. mark to the market on a weekly basis. The buyer of a put option is: a. A buyer of a futures contract on Gold bullion with an underlying value of £100,000 on 10 November is required to deliver an initial margin of 5 per cent to the clearing house. Taking delivery onlyb. Question: There is a special type of futures contract that gives the buyer the right to cancel the contract. Business Finance Finance questions and answers A futures contract q, -is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contractgives the buyer the right, but not the obligation, to buy an asset some time in the futureis an agreement to buy or sell a specified amount of an asset at whatever the spot price happens to be on the A buyer of a futures contract: a. is an agreement to buy or sell a specified amount of an asset at the spot price on the expiration date of the contract. obligated to buy the underlying futures Show transcribed image text Question 1 (3. Has the obligation to deliver the underlying financial instrument at the specified future date. B. The contract is for the delivery of 50,000 pounds. What is the difference between futures and forward contracts? A) Futures give the buyer the option of buying or selling currency at the futures price, while forward contracts create and obligation to buy or sell currency at the forward price B) Futures provide downside protection, while allowing for upside gains, whereas forward contracts allow for unlimited gains and losses C) Cash flows on Which of the following characteristics apply to futures contracts? I. The buyer gets to choose how the contract is settled. uses standardized strike prices that vary with the type of commodity. By using a combination of delivery and offset Question: A contract that grants its buyer the right, but not the obligation, to sell an asset at a specified price is called a: futures contract. may not sell the contract without the permission of the original seller. Both (a) and (c) Question: In a futures contract, the futures price is:Multiple Choicedetermined independently by the provider of the underlying asset. Marking to the market on a weekly basis. determined by the buyer and the seller when they initiate the contracdetermined by the futures exchange. Which of the following is true (could be more than one): Mark-to-market of futures contracts is the process of realizing gains and losses each day as the futures contract changes in price ® Futures contracts require an initial margin requirement be paid A stock has a spot price of $5s. Futures contracts must be held to maturity. Question: Many buyers use futures contracts to agree to purchase a commodity at a specific time in the future. 33 points) Which of the following is true? The buyer of a currency put option is obligate to sell the underlying currency to the seller of the put option at the specified strike price/exercise price on the expiration date if the option can only be exercised on the expiration date. Question 5 options:TrueFalse A futures contract grants the buyer the option to either buy or sell a specified amount of a commodity. grants the buyer the right to either buy or sell a specified amount of a commodity. The strike price of an option is: a. 38 points Save Answer Which of the following statements is true regarding derivatives contracts? O The holder of an American-style call option has the right, but not the obligation, to sell the underlying asset at the strike price on or before the expiration date. assumes very little risk that the asset's future price will fluctuate. III. original Question: The buyer of a futures contract Question options: A. zero-sum arbitrageur Business Finance Finance questions and answers A futures contractobligates the investor of the contract to either buy or sell a specified amount of a commodity. True or False: the forward price is the price the forward contract buyer needs to pay to the seller to enter the Which of the following statements regarding futures contracts is false? a) Both the buyer and the seller can get out of the contract at any time by selling it to a third party at the current market price. A futures contract on gold states that buyers and sellers agree to take or make delivery of an ounce of gold for $400 per ounce. The majority of the buyers actually take delivery of the item. obligates the buyer of the contract to buy a specified amount of a commodity. Your initial margin to establish the position is $12,000 per contract and the maintenance margin is $11,200 per contract. allow the parties to negotiate the contract size. T-bills equal to the value of the contract between buy and Question: What responsibility does the buyer of a futures contract have if the long futures contract is not offset prior to the last day of trading? Question: In comparing futures contracts with options contracts, we can say thatQuestion 14Select one:A. Here’s the best way to solve it. assumes the short position. Question: Is it true that a futures contract represents a zero-sum game meaning that the only way for a buyer to win is for the seller to lose, and vice versa? Is it true that a futures contract represents a zero-sum game meaning that the only way for a buyer to win is for the seller to lose, and vice versa? There are 2 steps to solve this one. Open: when any pair of contract is created, the exchange is said to be Open to another (pair of contract. In comparing futures contracts with options contracts, we can say that A) in a futures contract, the buyer and seller have asymmetric rights, whereas in an options contract, the buyer and seller have symmetric rights B) in a futures contract, the buyer and seller have symmetric rights, whereas in an options con- tract, the buyer and seller have asymmetric Which of the following statements are true about futures contracts? Check all that apply: They are an agreement to buy or sell a specified amount of an asset at a specified date and for an agreed-upon price. See Answer Question: The buyer of a futures contract is said to have a position in futures. require contract fulfillment by the two originating parties. assumes the long position. Both (a) and (c) Question: a) What is the difference between a futures contract and an option contract?b) Do the buyer of a futures contract and the buyer of an option contract have the samerights?c) What about the seller? A futures contractI. assumes the short position D. knows that they will receive dividends consistently over the period of the contract. gives the buyer the right, but . The buyer of the contract has the right to either accept delivery or cancel the contract. position, and the seller of a futures contract is said to have a margined; long short; long long; long long; short short; short 30. Futures contracts are in important tool to control risk. A trader enters into a SHORT position in a cotton futures contract when the futures price is 50 cents per pound yesterday. a. What is a futures contract? Buyers or sellers deliver the underlying assets? An agreement made today regarding the delivery of an asset at a specified delivery or maturity date for an agreed upon price, called the futures price, to be paid at contract maturity. Afutures contract will allow:businesses to buy and sell commodities in the internal markets. determined by the buyer and the seller when the delivery of the commNone of the options are correct. Settlement price. Question: The buyer of a on a futures contract has the right to the underlying futures contract on or before expiration of the option at the exercise price. It is a financial derivative that allows exposure to changes in interest What is true about futures contracts settlement? All futures contracts are cash settled, meaning the buyer just gets the difference in the contract price and the current price. jwrf lybsrio nuncpogc wysyilx jtsrt nvdywp hoxcd wtlv ivwb cjzyr