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Comparing forward and futures exchange contracts

Assignment Help Financial Management
Reference no: EM131514807

1. A CME contract on €125,000 with September delivery

A. is an example of a forward contract.

B. is an example of a futures contract. C.

is an example of a put option.

D. is an example of a call option.

2. Yesterday, you entered into a futures contract to buy €62,500 at $1.50 per €. Suppose the futures price closes today at $1.46. How much have you made/lost?

A. Depends on your margin balance.

B. You have made $2,500.00.

C. You have lost $2,500.00.

D. You have neither made nor lost money, yet.

3. Comparing "forward" and "futures" exchange contracts, we can say that

A. they are both "marked-to-market" daily.

B. their major difference is in the way the underlying asset is priced for future purchase or sale: futures settle daily and forwards settle at maturity.

C. a futures contract is negotiated by open outcry between floor brokers or traders and is traded on organized exchanges, while forward contract is tailor-made by a foreign exchange dealer for its clients and is traded OTC.

D. both b) and c)

Reference no: EM131514807

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