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5) What often happens to futures at the time of the crop for commodities with a specific well-defined harvest window?

A) They tend to be traded above the expected spot price at the contract's maturity.

B)They tend to be traded exactly at the expected spot price at the contract's maturity, making it difficult to profit as an investor.

C)They tend to be traded below the expected spot price at the contract's maturity.

D) Due to defaults, investors could lose a lot of money.

6) How is it possible to have a future based on the S&P500?

A)Anyone still holding the security on the final day will receive a proportionate number of shares in an S&P500 index fund.

B)There is a large fine on anyone who still holds the security on the final day.

C)On the last day, there is a final settlement of a combination of the other commodities on the futures market.

D)On the last day there is a final settlement of the difference between the futures price and the actual index.

7) What is the fair value of a futures contract with a storage cost of 3%, an interest rate of 5%, and a spot price of $1000 over a 1 year time period?

A)$1080.00

B)$1081.50

C) $1800.00

D) $1000.00

8) How can you determine whether a future is in backwardation or contango?

A) If the price is rising at an increasingly fast rate (has a positive second derivative), it is backwardation, but if it is falling at an increasingly fast rate (has a negative second derivative), it is contango.

B) If the price falls over time (has a negative derivative), it is back wardation, but if it rises (a positive derivative), it is contango.

C)If the price rises over time (has a positive derivative), it is backwardation, but if it falls (a negative derivative), it is contango.

D)If the price is falling at an increasingly fast rate (has a negative second derivative), it is backwardation, but if it is rising at an increasingly fast rate (has a positive second derivative), it is contango.

9) What is the Federal Funds Futures Market?

A)Futures contracts created by an exchange board which are settled at the end of each month for 100 minus the federal funds rate averaged over the month.

B)Futures contracts created by the government which are settled at the end of each year for 100 minus the federal funds rate averaged over the month.

C)Futures contracts created by an exchange board which are settled at the end of each year for 100 minus the federal funds rate averaged over the month.

D) Futures contracts created by the government which are settled at the end of each month for 100 minus the federal funds rate averaged over the month.