Question 2
A forward contract that is standardized and that is traded on an exchange is called a:
future. |
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exchange forward. |
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traded forward. |
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option. |
The answer is Future.
Explanation: Future are traded on stock exchange and forward contracts trade over OTC. Future is a forward contract which is regulated unlike Forwards.
Question 2 A forward contract that is standardized and that is traded on an exchange is...
Question 11 2 pts Which of the following is false? A negotiated non-standardized agreement between a buyer and seller (with no third party involvement) to exchange an asset for cash at some future date, with the price set today is called a forward agreement. In a futures contract, if funds in the margin account fall below the maintenance margin requirement, a margin call is issued. Forward contracts are traded over the counter European-style options are options that may only be...
in a forward contract the future exchange of assets is conduct through the mark to mark process
4 pts Question 2 Boeing just signeda contract to sell a Boeing 737 aircraft to Air France. Air France will be billed €50 million which is payable in one year. Tbe current spot exchange rate is $1.1/€ and the one-year forward rate is $1.20/€. The annual interest rate is 5.0% in the U.S. and 2.0 % in France. Boeing is concerned with the volati le exchange rate between the dollar and the euro and would like to hedge exchange exposure....
2. What are the differences among a spot contract, a forward contract, and a futures contract? 4. What is the purpose of requiring a margin on a futures or option transaction? What is the difference between an initial margin and a maintenance margin? 8. What is an option? How does an option differ from a forward or futures contract? 13. What factors affect the value of an option? 15. What is a swap?
Forward Contract Homework To record the purchase of inventories for €150,000 when the exchange rate is $1.30:€1. Company purchases forward contract to buy €150,000 at $1.35:€1. Exchange rate at maturity is $1.45:€1. Required: (Answers must be TYPED) Prepare all the journal entries at the inception of the contract through the maturity of the contract.
QUESTION 13 A futures contract on copper traded at the Chicago Mercantile Exchange has a denomination of 25,000 pounds. Today you enter into a long futures position of 10 contracts on copper at $3.33 per pound, maturing in 6 months. If copper is trading at $3.24 at maturity, what is your net profit from this position? QUESTION 14 You expect that the stock of GoPro, currently trading at $70 per share, will be volatile in the next three months, and...
5. On the floor of a futures exchange one futures contract is traded where the long counterparty is closing out an existing position while the short counterparty to the contract is opening a new position. What is the resultant change in open interest?
Comparing forward and futures contracts, we can say that: a. forward contracts are traded on organized exchanges while futures contracts are traded over-the-counter. b. forward contracts are standardized contracts while futures contracts are usually tailor-made. c. delivery of the underlying asset is usually made in forward contracts and delivery of the underlying asset is seldom made in futures contracts. d. forward contracts are mainly used for speculative purpose while futures contracts are mainly used for hedging purpose
A public, standardized transaction that constitutes a commitment between two parties to transfer the underlying asset at a future date at a price agreed upon now is BEST characterized as a(n): a. Swap b. Futures contract Exchange-traded contingent claim c.
A futures contract on copper traded at the Chicago Mercantile Exchange has a denomination of 25,000 pounds. Today you enter into a long futures position of 10 contracts on copper at $3.43 per pound, maturing in 6 months. If copper is trading at $3.75 at maturity, what is your net profit from this position?