Characteristic of a futures contract

Assignment Help Financial Management

Reference no: EM131593867

1- Which of the following is not a characteristic of a futures contract?

a- Futures contract size is standardized in currency amount.

b- Futures settlements are made daily via the exchange’s clearinghouse.

c- Trading prices of the currency futures are disseminated continuously by the exchange.

d- Futures market participants usually are known to one another.

e- All of the above are characteristic of a future contract.

2- Under a simple hedge with futures, when futures contract exists on the foreign currency you wish to hedge, what is implied hedge ratio?

a- - infinity

b- -1

c- 0

d- +1

e- + infinity

3- which of the following is not a problem that arises when hedging with futures?

a- Contract size is fixed and unlikely to match the position hedged

b- The expiration dates of futures contract relay match those of the currency

c- Size of the basis change is unpredictable expect at expiration

d- Choice of underlying assets in futures market is limited and may not match those being hedged

e- All of the above are problems that arise when hedging with futures

Reference no: EM131593867

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