Question 2

1. Suppose you sell a three-month forward contract at $35. One month later, new forward contracts are selling for $30. The risk-free rate is 10 percent. What is the value of your contract?

	$4.96
	$4.92
	$5.00
	$4.55

Question 6

1. Which of the following statements is most accurate?

	Futures contracts have more default risk than forward contracts.
	Futures contracts are private transactions.
	Forward contracts are marked to market daily.
	Forward contracts require that both parties to the transaction have a high degree of creditworthiness.

Question 7

1. A call option on a futures contract gives the holder the right to take a ____ position in the underlying futures contract upon exercising. When a holder of a futures put exercises, the assigned writer takes a ____ position in the futures contract.

	short, long
	long, short
	long, long
	short, short

Question 10

1. Which of the following statements is TRUE? I. A futures contract can have negative value. II. Forward and futures prices will be equal if interest rates are certain.

	II
	Both I and II are not true.
	I
	Both I and II are true.