A.Futures contracts are called zero sum games because: a. The gain/loss for the long will always be.

A.Futures contracts are called zero sum games because:

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A.Futures contracts are called zero sum games because: a. The gain/loss for the long will always be.
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a. The gain/loss for the long will always be equal to the loss/gain for the

shortb. The expected gain/loss for the long as well as the short is zero

c. Neither the long nor the short has to pay a price to enter into the contract

d. None of the above

B. Cash and carry arbitrage is profitable in the case of assets which pay no

income, if:

a. The futures price is greater than the spot price

b. The difference between the futures price and the spot price is greater

than the carrying cost

c. The implied repo rate exceeds the borrowing rate

d. (b) and (c)

C. Once a forward contract is entered into:

a. The forward price will remain fixed while its delivery price will keep

increasing

b. The forward price will remain fixed while its delivery price will keep

decreasing

c. The forward price will keep increasing while its delivery price will

remain fixed

d. None of the above

D. At the end of the day when a futures contract is marked to market, its value

will be reset to zero:

a. Only if it is a financial asset

b. Only if it is a financial asset or a physical asset held for investment

purposes

c. Only if it is a convenience asset

d. None of the above

E. If interest rates and futures prices are positively correlated then:

a. The futures price will be less than the forward price for a comparable

contract

b. The futures price will be more than the forward price for a comparable

contract

c. The long will be financing his losses at higher interest rates

d. (b) and (c)

F. As per the theory of Normal Backwardation:

a. Long futures positions can expect a positive payoff

b. The futures price will be less than the current spot price

c. Both (a) and (b)

d. Neither (a) nor (b)

G. Physical assets which are held for investment purposes:

a. Will always exhibit Contango

b. Will always exhibit Normal Contango

c. Will always be delivered at the beginning of the delivery period

d. (a) and (c)

H. Financial assets are always investment assets. Therefore:

a. They will always exhibit Contangob. They will always exhibit Normal Contango

c. They will always exhibit Backwardation

d. None of the above

I. Which of these securities can never be traded in the money market:

a. Equity shares

b. Debt securities

c. Preferred shares

d. (a) and (c)