Profit or Loss from a futures risk management strategy:I. Is the difference between the current price of the futures contract and its future price;II. Is used to offset the profit or loss of the previous market transaction;III. Is highly undesirable because does not allow to hedge the spot price of an underlying asset.Question 3Select one:a.Only II is correctb.All of the options are correctc.Only III is correctd.Only I is correcte.Only I and II are correct

Which of the following best describes the risks associated with futures contracts?Question 10Select one:a.The variability of changing prices and costs associated with buying and selling futures contractsb.The possibility of making an unexpected profit on a futures contractc.The probability of making a loss, or a fall in the value of a futures contractd.The possibility of loss associated with the default by the holder of the opposite position in the contract

An investor sells a futures contract on an asset when the futures price is $2500. Each contract is on 100 units of the asset. The contract is closed out when the futures price is $2560. Which of the following is TRUE? Select one alternative The investor has made a gain of $4000. The investor has made a gain of $6000. The investor has made a loss of $6000. The investor has made a loss of $4000.

Which of the following is TRUE? To hedge a natural short position with futures, the hedger should: a. Initially sell the futures contract and then buy the same contract at the delivery date. b. Initially buy the futures contract and then sell the same contract before the delivery date. c. Initially buy the futures contract and then sell the same contract after the delivery date. d. Initially buy the futures contract and then sell the same contract at the delivery date.

Which of the following statements is FALSE? a. Futures have less credit risk than forwards. b. Futures and forward derivatives are traded. c. Futures and forward contracts can be used to hedge profits. d. Forward contracts do not have basis risk.

In the futures markets, if a futures contract is marked-to-market, this refers to the:Question 3Select one:a.interaction of the demand and supply forces in the market to determine the price of the options contract.b.interaction of the demand and supply forces in the market to determine the price of the futures contract.c.settlement of gains and losses on futures contracts on a daily basis.d.settlement of gains and losses on forward contracts on a daily basis.