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These are BASIC questions about Futures Trading and Terminology sourced from new (in 2014) FRM Reading 14 (Futures and Options by The Institute for Financial Markets)
Question 1. Which of the following items in a futures contract is standardized?
A. The total number of contracts available for purchase and sale
B. The size: the amount of the underlying item covered by the contract
C. The price of the underlying commodity
D. None of the above
Question 2: Which of the following is a prerequisite for a commodity futures contract?
A. It must be paired with a comparable option on the same commodity.
B. The commodity underlying the futures contract must have low price volatility.
C. There must be competition in the underlying cash market.
D. The commodity must be storable.
Question 3: Which of the following is essential to the operation of a successful futures contract based on a physical commodity?
A. Viable spot or actuals market in the same or comparable cash commodities as those underlying the futures market
B. Competitive market conditions in both production and distribution channels
C. Access to inspection and grading facilities
D. All of the above
Question 4: If a client holding 1 short futures position buys 1 futures contract to offset her existing position and a client holding 1 long futures position sells 1 futures contract to offset his existing position, open interest.
A. Decreases by 2 contracts.
B. Increases by 2 contracts.
C. Is not changed.
D. Decreases by 1 contract.
Question 5. The counterparty to every cleared futures or futures option trade is:
A. The customer's futures commission merchant.
B. The exchange's clearinghouse.
C. The customer who took the opposite side of the trade.
D. The Introducing Broker (IB)
If you do not have Facebook, you can enter right here in our forum. Just answer the following questions:
These are BASIC questions about Futures Trading and Terminology sourced from new (in 2014) FRM Reading 14 (Futures and Options by The Institute for Financial Markets)
Question 1. Which of the following items in a futures contract is standardized?
A. The total number of contracts available for purchase and sale
B. The size: the amount of the underlying item covered by the contract
C. The price of the underlying commodity
D. None of the above
Question 2: Which of the following is a prerequisite for a commodity futures contract?
A. It must be paired with a comparable option on the same commodity.
B. The commodity underlying the futures contract must have low price volatility.
C. There must be competition in the underlying cash market.
D. The commodity must be storable.
Question 3: Which of the following is essential to the operation of a successful futures contract based on a physical commodity?
A. Viable spot or actuals market in the same or comparable cash commodities as those underlying the futures market
B. Competitive market conditions in both production and distribution channels
C. Access to inspection and grading facilities
D. All of the above
Question 4: If a client holding 1 short futures position buys 1 futures contract to offset her existing position and a client holding 1 long futures position sells 1 futures contract to offset his existing position, open interest.
A. Decreases by 2 contracts.
B. Increases by 2 contracts.
C. Is not changed.
D. Decreases by 1 contract.
Question 5. The counterparty to every cleared futures or futures option trade is:
A. The customer's futures commission merchant.
B. The exchange's clearinghouse.
C. The customer who took the opposite side of the trade.
D. The Introducing Broker (IB)