Quiz Ch 24 – Suitability of Selling Futures Contract
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
When might selling a futures contract be suitable for an individual?
When might selling a futures contract be suitable for an individual?
True or false: The buyer’s profit in a futures contract is the initial futures price minus the eventual market price.
True or false: Those buying financial futures place an order for the acquisition of a financial asset at a later date.
True or false: When a commodity producer utilizes put options to mitigate the risk of falling commodity prices, it is essentially purchasing insurance.
True or false: A significant number of large companies employ derivatives as part of their risk management strategy.
True or false: In a currency swap contract, a firm might agree to make regular payments in one currency in exchange for receiving a series of payments in another currency.
True or false: Corporations should opt for derivatives use in speculation rather than hedging unless they believe the odds are in their favor.
True or false: An offsetting futures contract can prevent delivery on a futures contract of a farmer.
True or false: Buying a futures contract involves a commitment to purchase at a predetermined price, which is binding upon contract maturity, unlike options.
True or false: Futures contracts are specialized versions of forward contracts.