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Explain how each of the following might make use of the futures market:(a)A lender who is worried ...
Explain how each of the following might make use of the futures market:(a)A lender who is worried ...
Explain how each of the following might make use of the futures market:
(a)   A lender who is worried that its cost of funds might rise during the term of a loan it has made.
(b)   A speculator who believes strongly that interest rates will ris
kolitchko   20   1 Reply
5 years ago
Why do investors hedge using futures contracts?
Why do investors hedge using futures contracts?
Why do investors hedge using futures contracts?
A) they are seeking to increase liquidity
B) they are willing to pay for a reduction in risk
C) in order to provide a counterparty to speculators
D) they are more flexible than forwa
kolitchko   49   1 Reply
5 years ago
All of the following are roles of an exchange EXCEPT
All of the following are roles of an exchange EXCEPT
All of the following are roles of an exchange EXCEPT
A) instituting margin requirements on futures contracts.
B) marking to market at the end of each day.
C) eliminating the need for buyers and sellers of futures contracts to be concer
kolitchko   21   1 Reply
5 years ago
A lender who is worried that its cost of funds might rise during the term of a loan it has made can ...
A lender who is worried that its cost of funds might rise during the term of a loan it has made can ...
A lender who is worried that its cost of funds might rise during the term of a loan it has made can hedge against this rise by
A) buying futures contracts on Treasury bills.
B) selling futures contracts on Treasury bills.
C) buying cal
kolitchko   34   1 Reply
5 years ago
The terms of futures contracts traded in the United States are
The terms of futures contracts traded in the United States are
The terms of futures contracts traded in the United States are
A) standardized as to amount or value, but not as to settlement dates.
B) standardized as to settlement dates, but not as to amount or value.
C) not standardized, but are d
kolitchko   35   1 Reply
5 years ago
Marking to market refers to
Marking to market refers to
Marking to market refers to
A) the determination of the prices of options contracts by the interaction of demand and supply.
B) the determination of the prices of futures contracts by the interaction of demand and supply.
C) the settle
kolitchko   26   1 Reply
5 years ago
If you sell a futures contract for U.S. Treasury bills and on the delivery date the interest rate of ...
If you sell a futures contract for U.S. Treasury bills and on the delivery date the interest rate of ...
If you sell a futures contract for U.S. Treasury bills and on the delivery date the interest rate of T-bills is higher than you expected, you will have
A) lost money on your long position.
B) gained money on your long position.
C) lost
kolitchko   30   1 Reply
5 years ago
If you buy a futures contract for U.S. Treasury bills and on the delivery date the interest rate on ...
If you buy a futures contract for U.S. Treasury bills and on the delivery date the interest rate on ...
If you buy a futures contract for U.S. Treasury bills and on the delivery date the interest rate on T-bills is lower than you expected, you will have
A) lost money on your long position.
B) gained money on your long position.
C) lost m
kolitchko   32   1 Reply
5 years ago
The futures price (Multiple Choice Question)
The futures price (Multiple Choice Question)
The futures price
A) reflects traders' expectations of the spot price on the day of delivery.
B) is always above the spot price on the day of delivery.
C) is always below the spot price on the day of delivery.
D) is always eq
kolitchko   47   1 Reply
5 years ago
Marking to market involves (Multiple Choice Question)
Marking to market involves (Multiple Choice Question)
Marking to market involves
A) changing the futures price to the spot price each day.
B) engaging in arbitrage so as to reduce the risk involved with futures contracts.
C) crediting or debiting the margin account based on the net change
kolitchko   55   1 Reply
5 years ago
The role of the Commodity Futures Trading Commission is to
The role of the Commodity Futures Trading Commission is to
The role of the Commodity Futures Trading Commission is to
A) set the prices of futures contracts.
B) operate the Chicago Mercantile Exchange.
C) operate the Chicago Board of Trade.
D) monitor potential price manipulation in futur
kolitchko   74   1 Reply
5 years ago
Financial futures contracts are regulated by
Financial futures contracts are regulated by
Financial futures contracts are regulated by
A) the Commodity Futures Trading Commission.
B) the Federal Trade Commission.
C) the Interstate Commerce Commission.
D) the Options and Futures Commission.
kolitchko   70   1 Reply
5 years ago
The seller of a futures contract
The seller of a futures contract
The seller of a futures contract
A) assumes the short position.
B) assumes the long position.
C) has the obligation to receive the underlying financial instrument at the specified future date.
D) is expecting the price of the unde
kolitchko   54   1 Reply
5 years ago
The buyer of a futures contract
The buyer of a futures contract
The buyer of a futures contract
A) assumes the short position.
B) has the obligation to deliver the underlying financial instrument at the specified date.
C) has the obligation to receive the underlying financial instrument at the spec
kolitchko   37   1 Reply
5 years ago
In recent decades (Multiple Choice Question)
In recent decades (Multiple Choice Question)
In recent decades
A) trading in financial futures declined in importance relative to trading in agricultural and mineral commodities futures.
B) trading in financial futures increased in importance relative to trading in agricultural and mi
kolitchko   61   1 Reply
5 years ago
If you look at the financial page listings for futures contracts and find that futures prices on ...
If you look at the financial page listings for futures contracts and find that futures prices on ...
If you look at the financial page listings for futures contracts and find that futures prices on Treasury bonds are falling over a particular time period, futures market investors must expect that
A) Treasury bond prices will be higher in the fu
kolitchko   104   1 Reply
5 years ago
In 2016, individual investors for the first time
In 2016, individual investors for the first time
In 2016, individual investors for the first time
A) made up more than 10% of the volume of daily trading of oil futures on the Chicago Mercantile Exchange.
B) were prohibited from trading in oil futures.
C) were allowed to trade in oil
kolitchko   25   1 Reply
5 years ago
Forward transactions (Multiple Choice Question)
Forward transactions (Multiple Choice Question)
Forward transactions
A) provide substantial liquidity.
B) entail small information costs.
C) provide risk sharing.
D) provide reduced tax payments.
kolitchko   33   1 Reply
5 years ago
The existence of counterparty risk:
The existence of counterparty risk:
The existence of counterparty risk
A) has no effect on the contracting parties.
B) is disallowed under current government regulations.
C) results in information costs for buyers and sellers when analyzing the potential creditworthines
kolitchko   44   1 Reply
5 years ago
Forward transactions (Multiple Choice Question)
Forward transactions (Multiple Choice Question)
Forward transactions
A) provide little risk sharing.
B) are very liquid.
C) have information problems.
D) are widely used by sellers of commodities, but rarely used by buyers of commodities.
kolitchko   36   1 Reply
5 years ago
Forward transactions originated in the market for
Forward transactions originated in the market for
Forward transactions originated in the market for
A) common stock.
B) corporate bonds.
C) government bonds.
D) agricultural and other commodities.
kolitchko   29   1 Reply
5 years ago
Forward transactions would be useful to
Forward transactions would be useful to
Forward transactions would be useful to
A) a government wanting to know the size of its future debt.
B) a household wanting to reduce its future tax liability.
C) a business wanting to know the cost of its funds on future loans.
D
kolitchko   32   1 Reply
5 years ago
Using forward transactions allows (Multiple Choice Question)
Using forward transactions allows (Multiple Choice Question)
Using forward transactions allows
A) holders of common stock to lock in future dividend payments.
B) the federal government to stabilize fluctuations in tax receipts.
C) corporations to reduce problems arising from future fluctuations
kolitchko   39   1 Reply
5 years ago
Explain how a bubble can develop in the market for an asset.
Explain how a bubble can develop in the market for an asset.
Explain how a bubble can develop in the market for an asset.
kolitchko   22   1 Reply
5 years ago
Which of the following is a behavior inconsistent with the efficient markets hypothesis?
Which of the following is a behavior inconsistent with the efficient markets hypothesis?
Which of the following is a behavior inconsistent with the efficient markets hypothesis?
A) diversification of one's portfolio
B) avoiding active trading of stocks
C) holding onto a losing stock while being more likely to sell a s
kolitchko   43   1 Reply
5 years ago
All of the following are possible consequences of noise traders EXCEPT
All of the following are possible consequences of noise traders EXCEPT
All of the following are possible consequences of noise traders EXCEPT
A) increased volatility in the financial market.
B) asset prices differing from fundamental values.
C) herd behavior contributing to speculative bubbles.
D) re
kolitchko   18   1 Reply
5 years ago
Herd behavior can best be described as
Herd behavior can best be described as
Herd behavior can best be described as
A) the large number of investors involved in the stock market.
B) how large participation in financial markets increase market efficiency.
C) informed investors can outperform relatively uninforme
kolitchko   19   1 Reply
5 years ago
A bubble occurs when (Multiple Choice Question)
A bubble occurs when (Multiple Choice Question)
A bubble occurs when
A) the price of a stock is above its fundamental value.
B) inside information is used to make profits from trading a company's stock.
C) a company reports profits that are significantly above or below the expe
kolitchko   44   1 Reply
5 years ago
Stocks of small firms have a higher annual average return than stocks in general. Some economists ...
Stocks of small firms have a higher annual average return than stocks in general. Some economists ...
Stocks of small firms have a higher annual average return than stocks in general. Some economists attribute this to
A) compensation for the higher risk of small firms.
B) lower liquidity of stocks of small firms.
C) higher information
kolitchko   55   1 Reply
5 years ago
The efficient markets hypothesis implies that stock investments should have the same expected return ...
The efficient markets hypothesis implies that stock investments should have the same expected return ...
The efficient markets hypothesis implies that stock investments should have the same expected return after adjusting for
A) risk.
B) information costs.
C) liquidity.
D) all of the above.
kolitchko   54   1 Reply
5 years ago
How can the Gordon growth model help explain the major decline in stock indexes during 2007-2009?
How can the Gordon growth model help explain the major decline in stock indexes during 2007-2009?
How can the Gordon growth model help explain the major decline in stock indexes during 2007-2009?
A) There was an increase in the required return on equities and a decrease in the expected growth rate of dividends.
B) There was a decrease i
kolitchko   41   1 Reply
5 years ago
The January effect (Multiple Choice Question)
The January effect (Multiple Choice Question)
The January effect
A) largely disappeared after receiving attention in the 1980s.
B) refers to the gap between futures prices and the prices of the underlying securities that occurs each January.
C) was stronger during the 1980s than d
kolitchko   30   1 Reply
5 years ago
The small-firm effect (Multiple Choice Question)
The small-firm effect (Multiple Choice Question)
The small-firm effect
A) shows that investments in the stocks of small firms would have earned a below-normal return during the period beginning in the mid-1920s.
B) may be the result of the low liquidity and high information costs of small
kolitchko   37   1 Reply
5 years ago
Studies indicate that many mutual fund managers and other professional investors
Studies indicate that many mutual fund managers and other professional investors
Studies indicate that many mutual fund managers and other professional investors
A) always earn better than the long-run average return on stocks.
B) never earn better than the long-run average return on stocks.
C) are unable to consis
kolitchko   29   1 Reply
5 years ago
A chief criticism of adaptive expectations is that
A chief criticism of adaptive expectations is that
A chief criticism of adaptive expectations is that
A) it assumes people ignore information that would be useful in making forecasts.
B) people have a hard time adapting.
C) it doesn't rely on technical analysis.
D) it violate
kolitchko   64   1 Reply
5 years ago
The long-run average annual return on investments in the stock market is ________ than the annual ...
The long-run average annual return on investments in the stock market is ________ than the annual ...
The long-run average annual return on investments in the stock market is ________ than the annual returns on investments in Treasury bills and ________ than the annual returns on investments in bank CDs.
A) higher; higher
B) higher; lower
kolitchko   50   1 Reply
5 years ago
Suppose Apple announces that its earnings for the fourth quarter of 2016 rose to $2 billion. As a ...
Suppose Apple announces that its earnings for the fourth quarter of 2016 rose to $2 billion. As a ...
Suppose Apple announces that its earnings for the fourth quarter of 2016 rose to $2 billion. As a result of this announcement the price of Apple's stock does not change. The best explanation of this is
A) market participants were expecting
kolitchko   49   1 Reply
5 years ago
An investor will generally find that hiring an investment firm to actively manage his or her ...
An investor will generally find that hiring an investment firm to actively manage his or her ...
An investor will generally find that hiring an investment firm to actively manage his or her portfolio will
A) result in a higher return than would be received from an index mutual fund.
B) be less expensive than simply placing money in an
kolitchko   29   1 Reply
5 years ago
One implication of the efficient markets hypothesis is that investors should
One implication of the efficient markets hypothesis is that investors should
One implication of the efficient markets hypothesis is that investors should
A) concentrate their investments in just a few well-chosen assets.
B) hold a diversified portfolio of assets.
C) buy stocks rather than bonds.
D) buy bon
kolitchko   44   1 Reply
5 years ago
Above-normal returns on stock investments can be expected by investors who
Above-normal returns on stock investments can be expected by investors who
Above-normal returns on stock investments can be expected by investors who
A) possess inside information.
B) are wealthy enough to hold the stock of many different companies in their portfolios.
C) are risk seeking.
D) concentrate
kolitchko   51   1 Reply
5 years ago
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