Chapter 13 Sec & Inv Word Scramble
|
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Question | Answer |
A standardized agreement to deliver or receive a specified amount of a specified financial instrument at a specified price and date. | Financial Futures Contract |
Financial futures are traded to speculate on prices of securities or to hedge existing exposure. | This Statement is True. |
Maintain their futures positions for longer period of time. | Position traders |
Take positions to profit from expected changes in the futures prices. | Hedgers |
Attempt to capitalize on price movements during a single day. | Day traders |
Order in which the trade is executed at the prevailing price. | market order |
The operations of financial futures exchanges are regulated by the | Commodity Futures Trading Commission |
Financial institutions generally use futures contracts to increase risk. | This Statement is False. |
Order in which the trade is executed if the price is within the limit specified by the customer. | limit order |
The price of an interest rate futures contract reflects the expected price of the underlying security on the settlement date. | This Statement is True. |
Financial institutions commonly take a position in interest rate futures to create a short hedge, which represents _________________ of a futures contract. | the sale |
The use of a futures contract on one financial instrument to hedge a position in a different financial instrument is called | Cross hedging |
Speculators who expect the stock market to perform well before the settlement date may consider ______________________ S&P 500 index futures. | purchasing |
Participants who expect the stock market to perform poorly before the settlement date may consider _________________ S&P 500 index futures. | selling |
The risk that a loss will occur because a counterparty defaults on the contract. | Credit Risk |
Refers to potential price distortions due to lack of liquidity. | Liquidity Risk |
The intertwined relationships among firms may cause one trader’s financial problems to be passed on to other traders. | Systemic Risk |
Refers to fluctuations in the value of the instrument as a result of market conditions. | Market Risk |
Refers to the possibility that the assets to be hedged may be prepaid earlier than their designated maturity. | Prepayment Risk |
The risk of losses as a result of inadequate management or controls. | Operational Risk |
The risk that the position being hedged by the futures contracts is not affected in the same manner as the instrument underlying the futures contract. | Basis Risk |
The Financial Reform Act in 2010 created the Financial Stability Oversight Council. | This Statement is True. |
Take positions to profit from expected changes in the futures prices. | Speculators |
Created by:
mrstephens
Popular Finance sets