QUESTION $28$

The primary difference between options and futures is that:

a$.$ the option premium is the full liability of the purchaser, while a futures contract may call for additional margin to hold the

b$.$ options are more speculative than futures.

c$.$ futures require the physical transfer of goods, while options do not.

d$.$ None of the above

e$.$ More than one of the above

QUESTION $29$

Trading in financial futures is similar to trading in commodities except for considerably higher margin requirements for financial

futures.

A$.$True

B$.$False

QUESTION $31$

The value of a stock index futures contract is the product of

a$.$ the settle price

and the appropriate multiplier.

b$.$ the change in the settle price

c$.$ the difference between the settle price and the change

d$.$ None of the above

QUESTION $33$

If a pension fund manager is afraid interest rates may go down on his short$-$term portfolio of $90-$day Treasury bills, he could hedge by going:

a$.$ long on Treasury bill futures contracts.

b$.$ short $($sell$)$ on Treasury bill futures contracts.

c$.$ long on U$.$S$.$ dollar contracts.

d$.$ short $($sell$)$ on the U$.$S$.$ dollar contracts.

QUESTION $34$

The high$-$risk, speculative nature of commodities futures is due primarily to:

a$.$ the presence of hedgers in the markets.

b$.$ high leverage brought about by low margin requirements.

c$.$ Both A and B

d$.$ None of the above

QUESTION $3$

Which of the following statements is true?

a$.$ For both calls and puts an increase in the exercise price will cause an increase in the option price

b$.$ For both calls and puts an increase in the time to maturity will cause an increase in the option price

c$.$ For calls, but not for puts, an increase in the time to maturity will cause an increase in the option price

d$.$ For puts, but not for calls, an increase in the time to maturity will cause an increase in the option price

QUESTION $7$

Suppose an investor buys a call option with an exercise price of $$25.$ If the stock is trading at $$30,$ the option is:

a$.$ At$-$the$-$money

b$.$ In$-$the$-$money

c$.$ Out$-$of$-$the$-$money

d$.$ Near$-$the$-$money