Futures contracts expose the investor to basis risk

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Reference no: EM131918021

1. Assume you have a short futures contract for July silver at a price of $20 per ounce. If the July spot price was $17 you would lose $3.

True

False

2. If the 3-month US$/Euro futures rate is roughly the same as the spot rate, we know the short-term interest rate in Euros is very similar to US short-term rate.

True

False

3. An investor with a long position in fixed-rate government bonds could hedge her risk by buying bond futures.

True

False

4. Futures contracts expose the investor to basis risk.

True

False

5. The March futures price of the Nikkei 225 is a good forecast of the index’s value in March.

True

False

Reference no: EM131918021

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