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Series 3 Practice Questions

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Series 3 Practice Questions A futures clearinghouse makes possible the closing out of a futures position by an offsetting market transaction - ANS - True Scalper - ANS - another name for a day trad ... er. Which of the following items in a futures contract is standardized? - ANS - The size - the amount of the underlying item covered by the contract Similar futures contracts can be traded on: - ANS - Multiple exchanges regardless of location The first notice day is: - ANS - The first day a short can issue a delivery notice. A futures contract is a legal agreement between a buyer and seller governing the future delivery of the specified commodity, financial instrument, index or other underlying instrument. - ANS - True Only persons who own or lease seats on an exchange may execute futures contracts on the exchange's trading floor or via the exchange's electronic trading system. - ANS - (True) Only seat owners or lessees may trade on the floor of an exchange or execute trades over an exchange's screen-based trading system. Other traders must send their orders through a seat owner or lessee Advantages of Futures Markets - ANS - Hedging is made possible. Large quantities of risk capital are attracted to one location. Futures exchanges act as a focal point for the dissemination of statistical and other information. The value or "worth" of a commodity is constantly being established. The number of futures contracts bought or sold over a specified period of time is called: - ANS - Volume The price at which a futures contract is bought or sold is determined by - ANS - Open bids and offers on the exchange floor or on the exchange's screen-based trading system. In contrast to futures, stocks or equities - ANS - are not regulated by the CFTC Who determines the size, grades, delivery locations and delivery months of a futures contract? - ANS - The exchange on which the contract is traded The seller of a futures contract is called the - ANS - Short Clearinghouses use guaranty deposits to: - ANS - Meet the financial obligations of a defaulting member to other clearing members. Cash forward contracts differ from futures contracts in that forwards - ANS - Are private contracts not subject to the rules of a futures exchange. Are not executed in open, competitive bidding. Have non-standardized contract terms. If an exchange member is "dual trading," unde [Show More]

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