the economics of money, banking, and financial markets

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29. 
    

    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) traded on an exchange
    Answer: D
    Diff: 2 Type: MC Page Ref: 330
    Skill: Recall
    Objective List: 14.1 Distinguish among forwards, futures, options, and swaps

    
    


30. 
    

    Which of the following features of futures contracts were not designed to increase liquidity?
    A) Standardized contracts
    B) Traded up until maturity
    C) Not tied to one specific type of bond
    D) Marked to market daily
    Answer: D
    Diff: 3 Type: MC Page Ref: 331
    Skill: Recall
    Objective List: 14.1 Distinguish among forwards, futures, options, and swaps

    
    


31. 
    

    Which of the following features of futures contracts were not designed to increase liquidity?
    A) Standardized contracts
    B) Traded up until maturity
    C) Not tied to one specific type of bond
    D) Can be closed with off setting trade
    Answer: D
    Diff: 3 Type: MC Page Ref: 331
    Skill: Recall
    Objective List: 14.1 Distinguish among forwards, futures, options, and swaps

    
    


32. 
    

    If a firm is due to be paid in euros in two months, to hedge against exchange rate risk the
    firm should ____.
    A) sell foreign exchange futures short
    B) buy foreign exchange futures long
    C) stay out of the exchange futures market
    D) buy foreign exchange forward contracts long
    Answer: A
    Diff: 2 Type: MC Page Ref: 331 - 332
    Skill: Applied
    Objective List: 14.1 Distinguish among forwards, futures, options, and swaps