Why are relatively few futures contracts settled by delivery? explain in detail
- Why are relatively few futures contracts settled by delivery? explain in detail
Homework Answers
Only few futures are settled by delivery bacause of cash settlement transactions.In cash settlement transaction, upon the maturity the position holder doesn't squareoff by delivering the physical security but instead settles the mark to market by cash.
In this modern world, More of the contracts are done using speculation in Derivatives not doing physical deliveries so there is more focus over settlement through Mark to market based method.
One of the other reasons that contract are not settled by delivery that rollover of the contract to next maturity but the primary reason is cash settlement cycle which is highly inclined towards speculation and Mark to market settlement in cash not in physical securities.
So overall because of above mentioned reasons there are lesser settlement through delivery in futures.
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Why are relatively few futures contracts settled by
delivery? explain in detail
Consider the following statements regarding futures contracts that may be settled by delivery: (1) "The long...
Consider the following statements regarding futures contracts that may be settled by delivery: (1) "The long initiates the delivery process" (2) "The short can choose when and how to settle the futures contracts" Both are correct Both are wrong (1) is correct and (2) is wrong (1) is wrong and (2) is correct
Insofar as forward contracts and futures exchange contracts are concerned: Multiple Choice delivery of the underlying...
Insofar as forward contracts and futures exchange contracts are concerned: Multiple Choice delivery of the underlying asset is seldom made with forward contracts, but usually made with futures contracts. None of the options. forward contracts are daily marked to market while futures contracts are settled at maturity. delivery of the underlying asset is seldom made with futures contracts and usually made with forward contracts. futures contracts are customized while forward contracts are standardized.
Which of the following are cash settled All futures contracts All option contracts Futures on stook...
Which of the following are cash settled All futures contracts All option contracts Futures on stook indices Futures on commodities
Which of the following are cash settled All futures contracts All option contracts Futures on stook...
Which of the following are cash settled All futures contracts All option contracts Futures on stook indices Futures on commodities
i need help with #5 Favorites say Questions (20 points each - Explain in detail) What...
i need help with #5
Favorites say Questions (20 points each - Explain in detail) What are the differences between futures and forward markets in terms of counterparty credit risk (3pts). contract delivery expected (3pts), timing flexibility (3pts), regulation (3pts), liquidity requirements (3pts), and capital requirem Explain in details. 2. Should a corporation hedge? Why might it increase firm value? Are there any reasons why a firm would not want to he Explain in details. 3. In class we discuss...
QUESTION 117 Which of the following regarding futures contracts is least accurate? a. Futures contracts are...
QUESTION 117 Which of the following regarding futures contracts is least accurate? a. Futures contracts are less liquid than forward contracts. b. Futures contracts are marked-to-market. c. Futures contracts are traded on a regulated exchange. d. Futures contracts allow more delivery options than forward contracts. QUESTION 118 A long position in a futures contract expiring in November can be offset by: a. Selling a future contract expiring in November. b. Selling a future contract expiring anytime between September and December....
Comparing forward and futures contracts, we can say that: a. forward contracts are traded on organized...
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
Which of the following statements is most accurate?Briefly explain A. Futures contracts could be private transactions. B. Forward contracts marked to market daily are futures contracts. C. A Forward c...
Which of the following statements is most accurate?Briefly explain A. Futures contracts could be private transactions. B. Forward contracts marked to market daily are futures contracts. C. A Forward contract could have the same liquidity as a Futures contracts. D. Futures contracts require that both parties to the transaction have a high degree of creditworthiness.
Which of the following statements is least accurate?Briefly explain A. Futures contracts are generally more liquid...
Which of the following statements is least accurate?Briefly explain A. Futures contracts are generally more liquid than forward contracts. B. Forward contracts cannot be offset unlike futures contracts. C. Forward contracts are easier to tailor to specific needs than futures contracts. D. Futures contracts are characterized by having a clearinghouse as an intermediary.
On Oct 5, 2011, you sold 10 Eurodollar futures contracts for Dec 2013 delivery at 98.995....
On Oct 5, 2011, you sold 10 Eurodollar futures contracts for Dec 2013 delivery at 98.995. You closed your position by buying 10 ED contracts at 99.015 on Jan 13, 2012. What is your gain or loss? One ED futures contract has a notional principal of $1 million with a 90-day maturity based on 30/360 day count method. F(Oct 5, 2011)= 98.995 F(Jan 13,2012)= 99.015 No of contracts = 10 Change in price quoted $ amount gain (loss)
Which of the following are cash settled All futures contracts All option contracts Futures on stook indices Futures on commodities
Which of the following are cash settled All futures contracts All option contracts Futures on stook indices Futures on commodities
i need help with #5
Favorites say Questions (20 points each - Explain in detail) What are the differences between futures and forward markets in terms of counterparty credit risk (3pts). contract delivery expected (3pts), timing flexibility (3pts), regulation (3pts), liquidity requirements (3pts), and capital requirem Explain in details. 2. Should a corporation hedge? Why might it increase firm value? Are there any reasons why a firm would not want to he Explain in details. 3. In class we discuss...
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