Notes

Coursera
0
Skip to Main Content

Shopping cart: 1 item

Financial Markets
Week 5
Lesson #12 Quiz
Prev
Next

Quiz • 18 min
Lesson #12 Quiz
Get closer to your goal

You are 16% more likely to complete the course if you finish the assignment
Submit your assignment
DueJun 22, 2:59 AM EDT
Attempts3 every 8 hours
Receive grade
To Pass80% or higher
Grade
—
Lesson #12 Quiz
Graded Quiz • 18 min

Due Jun 22, 2:59 AM EDT
Lesson #12 Quiz
Total points 9

1.Question 1

What is the effect of traders storing grain to wait for higher prices?

Traders are able to monopolize the market.

It is essential in preventing grain shortages.

Most grain ends up getting moldy in storage.

Most shortages could have been prevented if traders had not speculated on grain prices.
1 point

2.Question 2

In commodities trading, what is the role of forwards and futures?

Farmers sell in forwards and warehouses sell in futures.

Warehouses buy from the farmer in forwards, and then hedge on futures.

Farmers and warehouses sell exclusively in futures.

Farmers and warehouses sell crops in both forwards and futures.
1 point

3.Question 3

When an investor uses margin to buy or sell securities, how are the securities paid for?

On money borrowed from a broker only

A combination of an investor’s own funds and money borrowed from a broker.

A combination of an investor’s own funds and futures

On money borrowed from a broker whereby the broker may tell the investor at any time to sell securities or contribute money.
1 point

4.Question 4

What is the primary purpose of purchasing futures if they are rarely delivered?

To protect against price fluctuations.

To allow a corporation to buy and sell commodities, which would be impossible without futures.

To negotiate the best price on a commodity with a farmer.

To purchase the industry standard of a commodity, such as those put out by the Chicago Board of Trade (CBOT)
1 point

5.Question 5

What often happens to futures at the time of the crop for commodities with a specific well-defined harvest window?

They tend to be traded below the expected spot price at the contract’s maturity.

Due to defaults, investors could lose a lot of money.

They tend to be traded exactly at the expected spot price at the contract’s maturity, making it difficult to profit as an investor.

They tend to be traded above the expected spot price at the contract’s maturity.
1 point

6.Question 6

How is it possible to have a future based on the S&P500?

There is a large fine on anyone who still holds the security on the final day.

On the last day there is a final settlement of the difference between the futures price and the actual index.

On the last day, there is a final settlement of a combination of the other commodities on the futures market.

Anyone still holding the security on the final day will receive a proportionate number of shares in an S&P500 index fund.
1 point

7.Question 7

What is the fair value of a futures contract with a storage cost of 3%, an interest rate of 5%, and a spot price of $1000 over a 1 year time period?

$1081.50

$1800.00

$1000.00

$1080.00
1 point

8.Question 8

How can you determine whether a future is in backwardation or contango?

If the price is falling at an increasingly fast rate (has a negative second derivative), it is backwardation, but if it is rising at an increasingly fast rate (has a positive second derivative), it is contango.

If the price rises over time (has a positive derivative), it is backwardation, but if it falls (a negative derivative), it is contango.

If the price falls over time (has a negative derivative), it is backwardation, but if it rises (a positive derivative), it is contango.

If the price is rising at an increasingly fast rate (has a positive second derivative), it is backwardation, but if it is falling at an increasingly fast rate (has a negative second derivative), it is contango.
1 point

9.Question 9

What is the Federal Funds Futures Market?

Futures contracts created by the government which are settled at the end of each month for 100 minus the federal funds rate averaged over the month.

Futures contracts created by an exchange board which are settled at the end of each month for 100 minus the federal funds rate averaged over the month.

Futures contracts created by an exchange board which are settled at the end of each year for 100 minus the federal funds rate averaged over the month.

Futures contracts created by the government which are settled at the end of each year for 100 minus the federal funds rate averaged over the month.
1 point
I, Felix D Bravo, understand that submitting work that isn’t my own may result in permanent failure of this course or deactivation of my Coursera account.
Write a note in this area. It's really easy to share with others. Click here ...