the economics of money, banking, and financial markets

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25. 
    

    The number of contracts outstanding in a particular financial future is the ____.
    A) demand coefficient
    B) open interest
    C) index level
    D) outstanding balance
    Answer: B
    Diff: 1 Type: MC Page Ref: 329
    Skill: Recall
    Objective List: 14.1 Distinguish among forwards, futures, options, and swaps

    
    


26. 
    

    The advantage of forward contracts over futures contracts is that forward contracts
    ____.
    A) are standardized
    B) have lower default risk
    C) are more flexible
    D) have higher default risk
    Answer: C
    Diff: 1 Type: MC Page Ref: 330
    Skill: Applied
    Objective List: 14.1 Distinguish among forwards, futures, options, and swaps

    
    


27. 
    

    Futures markets have grown rapidly because futures ____.
    A) are standardized
    B) have higher default risk
    C) are illiquid
    D) are more flexible
    Answer: A
    Diff: 1 Type: MC Page Ref: 330
    Skill: Recall
    Objective List: 14.1 Distinguish among forwards, futures, options, and swaps

    
    


28. 
    

    Futures differ from forwards because they are ____.
    A) used to hedge portfolios
    B) used to hedge individual securities
    C) used in both financial and foreign exchange markets
    D) standardized contracts
    Answer: D
    Diff: 2 Type: MC Page Ref: 330
    Skill: Recall
    Objective List: 14.1 Distinguish among forwards, futures, options, and swaps