Reference no: EM132050878
1. A bank will accept delivery of $40,000,000 in one month, but it has no desire to bear interest rate risk on this money during the waiting period.
A. The bank should sell interest rate futures.
B. The bank should buy interest rate futures.
C. The bank could either buy or sell interest rate futures to hedge interest rate risk.
D. The bank cannot hedge interest rate risk with interest rate futures.
2. Which statement is accurate?
A. Speculators in futures markets are unnecessary.
B. Sellers of commodities (like grain farmers, for example) would almost always be buyers of futures contracts.
C. If you buy a futures contract for pork bellies, at the expiration of the contract, you will be required to accept delivery of the actual pork bellies.
D. During the life of a futures contract, a margin call could occur on any day (except perhaps for a holiday).
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