Futures contract are used as instruments of speculation in which of the following ways: Group of answer choices buy commodity now and resell it right away sell commodity now and wait for price to drop buy the future delivery and hope the commodity will be cheaper than now buy future delivery of a commodity and hop it will be more expensive than it is now

Futures contract are used as instruments of speculation in which of the following ways: Group of answer choices buy commodity now and resell it right away sell commodity now and wait for price to drop buy the future delivery and hope the commodity will be cheaper than now buy future delivery of a commodity and hop it will be more expensive than it is now

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter18: Auctions

Section: Chapter Questions

Problem 18.2IP

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Which of the following describes "volume" as a tool used in technical analysis of futures markets? A. A measure of trading intensity in a move of a futures price. B. The total number of futures contracts traded during a particular session C. It may be an indicator of a change in price direction D. All the above apply to the use of volume as technical indicator
Before 1972, futures trading was dominated by agricultural commodities. The spectacular growth of financial futures now accounts for approximately 50% of all futures trading. Why are they so popular? Is there any risk? Which industry dominates the market?
Futures contracts are standardized agreements to buy or sell a commodity in a central market which specifies quantity and quality of the commodity, allowing for a highly efficient and low-cost method of price discovery. A. True B. False
Trader A enters into a forward contract to buy an asset for $1000 in one year. Trader B buys a call option to buy the asset for $1000 in one year. The cost of the option is $100. What is the difference between the positions of the traders? Show the profit as a function of the price of the asset in one year for the two traders.Explain it properly
In futures trading, a "margin" is best defined by which of the following: A. Amount of price movement allowed before any money must be deposited to trade futures B. The number of futures contracts traded on a particular day in a commodity exchange. C. An exchange requirement for making a financial deposit before trading futures D. A buyer or seller of a futures contract taking the opposite position to close an open trade.
Assume you are a soybean producer wanting to establish a selling price range. You purchase a $10.00 put for 11 cents and sell a $11.00 call for 12 cents. The expected basis is 25 cents under Nov Soybean futures. What is your anticipated selling price range? Find the floor price and ceiling price.
Forward contracts are: a. Contracts usually involving the exchange of a commodity or financial instrument. b. Easily resold c. Always standardized d. An agreement between more than two parties
A long forward contract means that the contract will become more valuable as the price of the asset declines. true or false
The debt holders’ payoff in a firm has the shape of the payoff on a put option. True or false . Explain
Why do firms hedge their risk and what determines the choice of contract for hedging? Also examine the risk of hedging.
Margin trading occurs when a ________. Question 2 options: A) broker does not charge brokerage fee for a transaction B) buyer pays the broker immediately after buying a stock C) broker gives volume discounts to a good buyer D) buyer borrows money from the broker to buy stock E) buyer pays the broker before placing an order
The winning bid for a house at a bank auction was $10. But the house was not in good condition. The couple had to pay $65,000 in explicit expenses and spend many months doing the repairs. The time cost or lost wages are $10,000. What is the market value of the house after repairs are done? Explicit expenses = $65,000 Bid = $10 Time Cost (Lost Wages) = $ ? Market Value of House = Y (after expenses & repairs) Y = ?