EBF 301 EBF301 Quiz 7 With Answers (Penn State University)

EBF 301 EBF301 Quiz 7 Answers (Penn State University)

1. The Buyer of futures contracts is said to have a “short” position. 
2. The Seller of futures contracts is said to have a “short” position. 
3. The price of a futures contract is mostly related to the price of the underlying physical commodity. 
4. The FERC is the governmental agency that regulates commodity futures trading. 
5. The term that describes the fact that cash and futures prices tend to come together at the expiration of the futures contract is contango. 
6. In actuality only 2% of all futures contracts go to delivery. 
7. Someone taking a “short” futures position expects prices to remain flat. 
8. Conversely, someone who takes a “long” futures position expects prices to rise. 
9. For every Buyer of futures, there is a Seller. This results in futures trading being a “total-sum game”. 
10. Funds deposited with a clearing firm as a form of credit for trading futures through that firm are known as margin