【正文】 s initial level. C. The equity value falls below the initial margin. D. The equity value is above initial margin. C Question ID: 24890 Sue Wilkins buys one corn futures contract at $ per bushel (one contract is for 5,000 bushels). The initial margin requirement is 10 percent of the total contract purchase price, and the maintenance margin level is 65 percent. What is the amount of the per bushel price decline that will require a maintenance margin call to Wilkins? A. $.1250. 20 B. $. C. $.1050. D. $.0725. C The initial margin requirement is ($ x 5000 x .10) = $1,. The maintenance margin level is ($1,500 x ) = $. The difference between the initial and maintenance margin amounts is ($1, $) = $. When the market value of the modity decreases, the daily settlement process reduces the amount in the trader’s margin account. When the initial level of margin declines by $ Wilkins will receive a maintenance margin call. This will occur when the price per bushel declines by: ($) = , or by $.1050. Question ID: 14009 A trader has a short position in a wheat contract. ? the initial margin is $2,000 ? the maintenance margin is $1,500 ? there are 5,000 bushels in each wheat contract ? on August 10, the price is $ per bushel What is the price at which the trader will receive a maintenance margin call? A. $. B. $. C. $. D. $. C The short trader loses equity in the account when the price of wheat appreciates. $2,000$1,500 = $500. 5,000() = 500. P = $. Question ID: 14008 21 A trader has a long position in a wheat contract. ? the initial margin is $1,000 ? the maintenance margin is $750 ? there are 5,000 bushels in each wheat contract ? on May 14, the price is $ per bushel What is the price at which the trader will receive a maintenance margin call? A. $. B. $. C. $. D. $. C The trader will receive a margin call when the price of the contract declines by $250, or 1,000750. (5,000)() = 250. P = $ Question ID: 14018 Offset must involve entering into a: A. none of these choices are correct. B. long position. C. reversing trade. D. short position. C Question ID: 14016 Which of the following can be used to honor an obligation in the futures market? A. Delivery of the underlying asset. 22 B. Cash settlement. C. Closing the position by selling exactly the same number of contracts in the futures market. D. All of these choices are correct. D Question ID: 24893 All of the following are methods to close out a futures position EXCEPT: A. delivery of the underlying modity. B. through an exchange for physicals with another trader. C. engaging in an offsetting trade in the futures market. D. allowing the contract to expire without taking action. D A futures contract cannot expire without any action being taken. If the contract has not been closed out through an offsetting trade, then one party must deliver the underlying modity and the other party must purchase the modity. Question ID: 24894 Which type of futures contract does NOT allow for the underlying goods to be delivered? A. Interest rate. B. Foreign currency. C. Index. D. Agricultural. C 23 The nature of an index future realistically prohibits settlement in the underlying modity. For example, the Standard and Poor’s 500 stock index would require settlement in 500 different mon stocks, in the exact proportion of the total value as exists in the index at expiration of the future. Agriculture, interest rate, and currency futures all involve deliverable modities. Question ID: 24896 Which is the only type of modity where trading in forward contracts is larger than trading with future contracts? A. Agricultural. B. Foreign currency. C. Interest rate. D. Metallurgical. B Trading in foreign currency forwards is far larger than the trading in futures. For example, with international trade, businesses can hedge against adverse currency fluctuations. But each business arrangement is unique, and most require the flexibility of a forward, whose terms are not standardized, that meets their special needs. Question ID: 24897 Of the following types of futures, which has experienced the greatest trading growth rate since 1975? A. Index. B. Agricultural. C. Metallurgical. D. Interest rate. D Interest rate futures began。P 500. C A put option guarantees the buyer can sell the asset to the writer at the exercise price, on or before its expiration. Puts allow traders to earn a positive return when the underlying asset decreases in value. A diversified mutual fund can trade in Samp。s 500 Index (Samp。 1 16: Asset Valuation: Derivative Investments : Introduction Question ID: 13922 Hedgers in the futures market usually: A. only trade in futures market. B. only trade in cash market. C. trade in neither cash nor futures markets. D. trade in both cash and futures markets. D Question ID: 13920 Any rational price for a financial instrument should: A. be low enough for most investors to afford. B. be always increasing. C. provide no opportunity for arbitrage. D. provide an opportunity for investors to make a profit. C Question ID: 24778 Which of the following statements about options and their underlying assets is FALSE? A. The value of an option, in parison to its underlying asset, has the potential of creating an arbitrage opportunity. B. The owner of the option is legally required to engage in a transaction involving the asset. 2 C. The holder of a long position on an option is the only party with the right to initiate a transaction involving the asset. D. The seller of the option is legally required to engage in a transaction involving the asset. B