Start learning →

CA Final Futures Contract — practice questions

Explore 69 free Futures Contract questions in CA Final Strategicfinancialmanagement. Open each question or exercise to read its content, reference answers and available explanation.

Practise Futures Contract with Quill →

Futures Contract questions and exercises with answers

Showing questions 1–30 of 69.

A non-standardized contract to buy or sell an asset later at an agreed price is a:Read the answer and worked solution →In a forward contract, the party agreeing to buy the underlying asset in the future is said to hold which position?Read the answer and worked solution →The party that agrees to sell the underlying asset at a future date under a forward contract assumes which position?Read the answer and worked solution →Which feature distinguishes a futures contract from a forward contract?Read the answer and worked solution →Forward contracts are traded in which type of market?Read the answer and worked solution →Who guarantees trades on a regulated futures exchange?Read the answer and worked solution →The performance bond that both parties deposit with the futures exchange to guard against default is called:Read the answer and worked solution →The equity required to open a futures position, set by the exchange, is the:Read the answer and worked solution →Daily re-evaluation of a futures position against the day's futures price, with gains and losses settled, is called:Read the answer and worked solution →A broker demands extra funds when a futures account balance falls below the required level. This demand is a:Read the answer and worked solution →Which settlement method pays only the gain or loss in money at expiry, with no delivery of the underlying?Read the answer and worked solution →Stock index futures cannot be settled by delivering the index itself, so they are settled by:Read the answer and worked solution →In practice, most futures contracts are ended by:Read the answer and worked solution →Alice owns a 100,000 house; the risk-free rate is 4% a year. Minimum one-year forward price?Read the answer and worked solution →A forward fixes a house price at 104,000; it is later worth 110,000. Buyer's profit?Read the answer and worked solution →Long forward: delivery price 50, 1,000 units, spot 58 at maturity. Gain?Read the answer and worked solution →A firm is short 500 units under a forward at 120 per unit. The spot at maturity is 105. What is the outcome?Read the answer and worked solution →For an asset paying no income, the no-arbitrage forward price equals the spot price compounded at the:Read the answer and worked solution →An asset costs 2,000; risk-free rate 6% compounded annually. Two-year forward price?Read the answer and worked solution →Spot 100; continuous risk-free rate 10%. One-year forward price (e^0.1 = 1.10517)?Read the answer and worked solution →When the underlying asset pays income, the forward price is relative to a non-paying asset:Read the answer and worked solution →Share 1,000; risk-free rate 10%; dividend 40 paid at year end. One-year forward price?Read the answer and worked solution →Gold costs 800, the risk-free rate is 5% and storage of 16 is paid at year end. What is the one-year forward price?Read the answer and worked solution →The non-cash benefit of physically holding a consumption commodity such as oil, rather than a forward, is the:Read the answer and worked solution →Which of these is a consumption asset rather than an investment asset?Read the answer and worked solution →Which of these is an investment asset, held mainly for investment purposes?Read the answer and worked solution →The net cost of holding an asset relative to holding a forward on it, covering interest, storage and yields, is the:Read the answer and worked solution →If r = 6%, income yield q = 2%, storage cost u = 1% and convenience yield y = 0, the cost of carry c = r - q + u - y is:Read the answer and worked solution →Spot is 100, r = 8%, q = 3%, u = 2%, y = 1%. The cost of carry c (as a percentage) is:Read the answer and worked solution →With spot 100, a carry cost c of 5% continuous and T = 1, F = S e^(cT) is closest to (e^0.05 = 1.05127):Read the answer and worked solution →

Worked practice questions

A non-standardized contract to buy or sell an asset later at an agreed price is a:

  1. Exchange-traded option
  2. Futures contract
  3. Forward contract
  4. Preference share
Show answer and solution

Correct answer: C. Forward contract

Customised, privately negotiated agreements to trade later at a fixed price are forwards; standardization marks futures.

Open this question →

In a forward contract, the party agreeing to buy the underlying asset in the future is said to hold which position?

  1. Short position
  2. Long position
  3. Neutral position
  4. Hedged position
Show answer and solution

Correct answer: B. Long position

The buyer of the underlying at the future date holds the long position, while the seller holds the short.

Open this question →

The party that agrees to sell the underlying asset at a future date under a forward contract assumes which position?

  1. Long position
  2. Spot position
  3. Short position
  4. Margin position
Show answer and solution

Correct answer: C. Short position

Agreeing to deliver the asset later is the short side of the forward; the buyer is long.

Open this question →

How to practise

  1. Choose a Futures Contract question and try to work out your answer.
  2. Open the question to check the correct answer and read its worked solution.
  3. Continue in the app for bite-sized lessons, explanations and review with Quill. You can start without creating an account.

More Strategicfinancialmanagement topics

Mergers Acquisitions and Corporate RestructuringBusiness ValuationCapital BudgetingForeign Exchange Exposure and Risk ManagementInterest Rate RiskModern Portfolio TheoryPortfolio ManagementValuation (Finance)