Exam 19: Future Contracts and Forward Rate Agreements

A company has sold a three-year Commonwealth Treasury bond futures contract,and now wishes to close out its open position on maturity date.Which of the following statements relating to the closing out of a futures position is incorrect?

Calculate how much a futures trader who enters into a 90-day bank bill futures contract on 20 September with a reported price of $93.25 will need to pay on settlement date (30 September),if the face value of the underlying bill is $1 000 000.

In the futures markets,price differences between the futures and the underlying assets are reduced by the actions of:

At the end of six months for a wheat farmer who sold previously a 6 month wheat futures contract,he may:

Buying a September bank bill futures contract and simultaneously selling a June bank bill futures contract is a/an:

In futures markets investors who expect to purchase future bonds can reduce the risk of price fluctuations by taking a/an:

The terms of futures contracts _______ standardised and the terms of forward contracts _______ standardised.

An Australian bank must pay US$10 million in 90 days.It wishes to hedge the risk in the futures market.To do so,the bank should:

In futures markets,the terms of a futures contract,for instance the quality and quantity of the commodity and the delivery date,are specified by the:

If a FRA covers six-month interest rates but will begin its cover in three months it will be written:

In the futures markets speculators are mainly interested in:

Which of the following statements in relation to margins is correct?

Basis risk refers to the risk associated with unanticipated price movements.

In the futures markets the buyer of a financial futures contract:

For hedging interest rates the advantages of a FRA are:

Comment briefly on the history of futures contracts.

An orange grower who wishes to protect his future orange crop from price fluctuations can hedge by taking a/an:

If a bond investor sells a three-year Commonwealth Treasury bond futures contract at 7 per cent and on delivery date the interest rate of Treasury bonds is higher than they expected at 6 per cent,they will have:

List the range of futures contracts currently offered by ASX Trade 24 and briefly discuss their role.

_______ try to make a profit by taking advantage of price differentials between the futures markets or different markets.