Deck 14: Futures Contracts

Question 1

You have a market position which allows you to profit when market prices increase but causes you a loss when market prices decline. This position is defined by which one of the following terms?

A)forward position
B)futures position
C)long position
D)short position
E)speculative position

Answer 1

C

Question 2

Which one of the following terms is defined as the process of recognizing gains and losses on outstanding futures positions on a daily basis?

A)profit taking
B)margin adjusting
C)daily distributing
D)market adjusting
E)marking to market

Answer 2

E

Question 3

Which one of the following is a contract managed by an organized exchange that allows a buyer and seller to agree on a price today for an exchange of goods that will occur sometime in the future?

A)futures contract
B)spot market
C)cash market
D)forward contract
E)discounted contract

Answer 3

A

Question 4

Futures margin is defined as the deposit of funds into a futures trading account for which one of the following purposes?

A)purchase additional futures contracts
B)take a hedge position in the future
C)cover potential losses from outstanding positions
D)cover the trading costs and commissions
E)cover the future costs of reversing the position

Question 5

Which one of the following is the definition of the term "basis"?

A)initial cost of purchasing a futures contract
B)future price of a transaction that is agreed upon today
C)difference between the cash and futures price of a commodity
D)the expected future price of a commodity based on the current spot price
E)the expected spot price of a commodity based on the future price

Question 6

A long hedge is the addition of which one of the following to a short position in the underlying asset?

A)short spot position
B)any spot position
C)any futures position
D)long futures position
E)either a short spot or short futures position

Question 7

Which one of the following is a trade that will close out a previously established futures position?

A)maintenance call
B)margin call
C)reverse trade
D)position reversal
E)margin closeout

Question 8

When does the holder of a short position realize a profit?

A)when prices rise
B)when prices either remain constant or rise
C)when prices remain constant
D)when prices either remain constant or decline
E)when prices decline

Question 9

Which one of the following is the price of a commodity designated for delivery today?

A)daily price
B)marked price
C)margin price
D)arbitrage price
E)cash price

Question 10

Which one of the following terms applies to the amount of money required when a futures position is first bought or sold?

A)original deposit
B)initial margin
C)spot margin
D)equity deposit
E)mark to market

Question 11

A financial instrument on which a futures contract is based is called which one of the following?

A)hedged security
B)short position
C)long position
D)speculative asset
E)underlying asset

Question 12

Which one of the following is a notification to a futures contract holder that additional margin funds are needed?

A)marking to market
B)deposit call
C)shortage notice
D)margin call
E)marking call

Question 13

Which one of the following is the definition of maintenance margin?

A)initial amount required when a futures contract is either bought or sold
B)maximum amount of margin permitted for a futures account
C)minimum margin required in a futures account at all times
D)the additional amount requested in a margin call
E)the minimum amount needed to reverse a futures position

Question 14

You own 450,000 bushels of wheat. If you decide to add a short futures position in wheat you will be taking which one of the following positions?

A)short hedge
B)long hedge
C)program trade
D)short arbitrage
E)long arbitrage

Question 15

A futures price is a price that is negotiated ________ and paid ________.

A)today; in the future
B)today; today
C)in the future; in the future
D)in the future; today
E)either today or in the future; in the future

Question 16

Which one of the following is the strategy of earning risk-free profits by taking advantage of any unusual differences between cash and futures prices?

A)cash-futures arbitrage
B)mark to market
C)margin calling
D)basis recognition
E)cash spotting

Question 17

An investor who accepts the risk of a loss in exchange for the chance to earn a profit is referred to as which one of the following?

A)hedger
B)short seller
C)speculator
D)broker
E)dealer

Question 18

A futures position that is equal, but opposite, the position you have in the underlying asset defines which one of the following terms?

A)short hedge
B)long hedge
C)full hedge
D)partial hedge
E)underlying hedge

Question 19

An investor who shifts risk is referred to as which one of the following?

A)hedger
B)short seller
C)speculator
D)broker
E)dealer

Question 20

Which one of the following is another name for the cash market?

A)futures market
B)forward market
C)arbitrage market
D)current basis market
E)spot market

Question 21

Which of the following features apply to a futures contract?
I. zero-sum game
II. derivative security
III. maturity date
IV. settlement procedure

A)I and II only
B)I and III only
C)II and III only
D)II, III, and IV only
E)I, II, III, and IV

Question 22

Which one of the following is a difference between a forward contract and a futures contract?

A)Forward contracts are based on commodities while futures contracts are based on financial instruments.
B)The price of the asset exchanged is determined when a forward contract is entered while the price is set on the exchange date for a futures contract.
C)A forward contract is a formal agreement while a futures contract is an informal agreement.
D)Futures contracts are managed through an organized exchange while forward contracts are not.
E)There are no differences between forward and futures contracts.

Question 23

Sugar is currently selling for $.201 a pound while the 6-month futures price is $.208. You take a long position in the 6-month sugar futures. Which one of the following prices would cause you the greatest loss if that price turns out to be the actual price of sugar per pound 6 months from now?

A)$.198
B)$.201
C)$.205
D)$.208
E)$.211

Question 24

In 2007, the Chicago Mercantile Exchange merged with which one of the following exchanges?

A)Intercontinental Exchange
B)New York Board of Trade
C)Chicago Board of Trade
D)Coffee, Sugar, and Cocoa Exchange
E)New York Futures Exchange

Question 25

Which one of the following statements is true regarding futures contracts?

A)Futures prices are generally set equal to the spot price on the delivery date.
B)Futures contracts generally grant the buyer the option to accept only a portion of the contract.
C)Cost and convenience are the two key considerations when establishing the settlement procedures.
D)The seller of a futures contract has the option to deliver cash in an amount equal to the contract value in lieu of the underlying asset.
E)The buyer and seller of the contract negotiate the price on the maturity date.

Question 26

Corn is currently selling for $6.15 a bushel while the 3-month futures price is $6.20. Carl believes that corn will actually sell for $6.45 a bushel 3 months from now. Which one of the following positions in corn should he take today, given this belief?

A)sell in the spot market
B)sell in the futures market
C)take a long position in the futures market
D)take a short position in the futures market
E)take a short position in the spot market

Question 27

The spot price of corn is $5.85 a bushel. The 3-month futures price of corn is $5.80. Which one of the following best describes this market?

A)buyer's market
B)arbitrage opportunity
C)inverted market
D)carrying-charge market
E)market parity

Question 28

In which city does the largest volume of futures trading in the United States occur?

A)Boston
B)New York
C)Chicago
D)Kansas City
E)Minneapolis

Question 29

Which one of the following terms is defined as the strategy of monitoring the futures price on a stock index in relation to the value of the underlying index to profit from any parity deviations?

A)parity trading
B)index trading
C)program monitoring
D)inverted arbitrage
E)index arbitrage

Question 30

What is the normal means of delivery on a Treasury note futures contract?

A)delivery in cash
B)change in registered ownership
C)direct deposit of cash into the seller's bank account
D)wire transfer of funds from the buyer's bank to the seller's bank
E)payment by certified check on the maturity date

Question 31

Which one of the following best defines a carrying-charge market?

A)interest is charged on the margin balance
B)cash price is less than the futures price
C)positive basis market
D)spot market price is greater than the cash price
E)spot market price exceeds the futures price

Question 32

What is the highest price at which the May coffee futures contract traded during this day?
$\begin{array}{lrr}&\text { Contract } & \text { High }& \text { Low }& \text { Close}& \text { Chg }\\\text { May, Coffee, }& 37,500 \text { lbs., cents } & 138.00& 135.50 & 137.15 & 2.20\\ \text { per I b } &\\\text { Dec, Cotton, }&\text { 50,000 lbs., cents } & 80.59 & 78.85 & 80.63 & .27\\ \text {per I b } &\\\end{array}$

A)$1.3715
B)$1.3800
C)$137.15
D)$138.00
E)$140.20

Question 33

Which one of the following statements related to futures contracts is correct?

A)The buyer of the contract has a short position.
B)The buyer of the contract has the right to either accept delivery or cancel the contract.
C)Futures contracts can be cancelled by either the buyer or the seller with 10 days' notice to the other party.
D)Both the buyer and the seller of the contract are obligated to fulfill their duties as outlined in the futures contract.
E)The buyer of the contract must deliver the underlying asset on the settlement date.

Question 34

What price will be used for this day for the mark to market per pound on December cotton?
$\begin{array}{lrr}&\text { Contract } & \text { High }& \text { Low }& \text { Close}& \text { Chg }\\\text { May, Coffee, }& 37,500 \text { lbs., cents } & 138.00& 135.50 & 137.15 & 2.20\\ \text { per I b } &\\\text { Dec, Cotton, }&\text { 50,000 lbs., cents } & 80.59 & 78.85 & 80.63 & .27\\ \text {per I b } &\\\end{array}$

A)$.7885
B)$.8063
C)$78.85
D)$80.59
E)$80.63

Question 35

Which one of the following entails the use of computers to monitor prices and also to submit trade orders in response to arbitrage opportunities?

A)computer simulation
B)computer hedging
C)automated monitoring
D)program trading
E)cash-futures parity

Question 36

Assume the futures price of a commodity is equal to the future value of the cash price, calculated at the risk-free rate. Given this, which one of the following terms applies to the market for this commodity?

A)positive basis equilibrium
B)humped market
C)inverted market
D)time equilibrium
E)spot-futures parity

Question 37

What was the price per pound of December cotton at the end of this trading day?
$\begin{array}{lrr}&\text { Contract } & \text { High }& \text { Low }& \text { Close}& \text { Chg }\\\text { May, Coffee, }& 37,500 \text { lbs., cents } & 138.00& 135.50 & 137.15 & 2.20\\ \text { per I b } &\\\text { Dec, Cotton, }&\text { 50,000 lbs., cents } & 80.59 & 78.85 & 80.63 & .27\\ \text {per I b } &\\\end{array}$

A)$.7885
B)$.8036
C)$.8059
D)$.8063
E)$.8090

Question 38

When the seller of a futures contract is granted a choice among various assets to deliver, the seller is said to have which one of the following options?

A)right-to-choose option
B)spot or futures option
C)cheapest-to-deliver option
D)mark-to-market option
E)flexible delivery option

Question 39

A farmer has a long position in barley and hedges it with a short position in wheat. Which one of the following terms applies to this situation?

A)cross-arbitrage
B)parity play
C)market arbitrage
D)cross-hedge
E)program trade

Question 40

Futures contracts exist for which of the following?
I. pork bellies
II. S&P 500 index
III. Eurodollars
IV. cocoa

A)I and IV only
B)II and III only
C)I, II, and IV only
D)I, III, and IV only
E)I, II, III, and IV

Question 41

The duration of an interest rate futures contract is equal to the summation of which of the following?
I. duration of the instrument most likely to be used as a cross-hedge
II. duration of the underlying instrument
III. initial length of time of the futures contract
IV. time remaining on the futures contract

A)II only
B)I and II only
C)I and III only
D)II and III only
E)II and IV only

Question 42

A fully hedged stock portfolio will have a beta equal to which one of the following?

A)an average asset
B)U.S. Treasury bill
C)S&P 500
D)the beta of the stock portfolio exclusive of the hedge
E)one-half of the beta of the stock portfolio exclusive of the hedge

Question 43

Which of the following are reasons why commodities may have a negative basis?
I. storage costs
II. seasonal price fluctuations
III. transportation costs
IV. interest costs

A)I only
B)IV only
C)I and III only
D)I, II, and III only
E)I, II, III, and IV

Question 44

You have 50,000 pounds of cotton in storage. You don't want to sell the cotton today as you believe the price of cotton will be higher six months from now than what the markets currently predict. However, you also realize that the price could decline. Which one of the following would hedge your risk of owning the cotton for the next few months?

A)short futures position
B)long futures position
C)short spot position
D)long spot position
E)long futures position combined with a short spot position

Question 45

You can withdraw funds from your margin account without closing your futures contract given which two of the following?
I. marking to market deducts funds from your margin account
II. marking to market adds funds to your margin account
III. margin balance after the withdrawal will exceed the maintenance margin requirement
IV. margin balance after the withdrawal will exceed the initial margin requirement

A)I and III only
B)I and IV only
C)II and III only
D)II and IV only
E)Funds cannot be withdrawn as long as the futures contract is outstanding.

Question 46

How is a futures contract on the S&P 500 index settled?

A)cash
B)shares of stock selected by the contract buyer
C)shares of stock selected by the contract seller
D)shares of stock equivalent to those in the index
E)delivery of a Treasury bill equal in value to the settlement amount

Question 47

You are trying to value a 3-month futures contract on a stock. The market rate of return is 11.2 percent, the risk-free rate is 3.8 percent, and the dividend yield on the stock is 2.6%. The stock is currently selling for $33 a share. What is the value of "T" as used in the formula for computing the future stock price (FT = S(1 − r)^T)?

A).112
B).250
C).026
D).038
E).064

Question 48

Which one of the following futures contracts is generally used to hedge a bond portfolio?

A)S&P 500 index
B)Eurodollar
C)U.S. Treasury notes
D)gold
E)LIBOR rates

Question 49

What is the closing value of one December futures contract on corn?
$\begin{array}{llll}&\text { Contact } & \text { Open } & \text {High} & \text { Low}& \text { Close}\\\text { Dec. Corn. }&\text { 5,000 bu, cents/bu } & 620.50 & 623.50 & 613.00 & 617.00\\\text { Dec. Wheat, }&\text { 5,000 bu, cents/bu } &804,00 &810.00 &798,50 & 801,00\end{array}$

A)$6.17
B)$617.00
C)$30,850
D)$308,500
E)$3,085,000

Question 50

Luke owns a large farming operation that encompasses over 5,000 acres of corn. The crop this year is abundant and will be ready for harvesting next month. Luke likes the market prices today but expects the prices to decline over the next month as the supply of corn increases. Which one of the following positions should Luke take to hedge his corn crop?

A)sell in the spot market today
B)buy in the spot market today
C)take a long futures position
D)take a short futures position
E)sell in the spot market today and take a long position in the futures market

Question 51

You are a baker and need to purchase a substantial amount of wheat flour three months from now in preparation for your busy season. Your concern is that the price of wheat will increase substantially before you make your purchase. Which one of the following positions in wheat would be an effective hedge for you?

A)long position in spot market
B)short position in spot market
C)long position in futures market
D)short position in futures market
E)none of these

Question 52

You currently own a stock portfolio that has a beta of 1.2. If you fully hedge your stock portfolio you will effectively change the portfolio's beta to which one of the following?

A)0
B)1
C)1 / 1.2
D)1.2
E)1.22

Question 53

You own a diversified investment portfolio and wish to hedge it against market declines. Which one of the following would be best suited as a cross-hedge for this purpose?

A)going long on Treasury bonds in the spot market
B)going long on DJIA futures
C)going short on S&P 500 index futures
D)going long on an index fund
E)going short on Eurodollar futures

Question 54

Which of the following are needed to determine the number of stock index futures required to cross-hedge a stock portfolio?
I. standard deviation of the stock portfolio
II. beta of the stock portfolio
III. value of the index futures contract
IV. value of the stock portfolio

A)I and III only
B)II and IV only
C)I, II, and III only
D)II, III, and IV only
E)I, III, and IV only

Question 55

Which one of the following statements is correct?

A)Futures contracts must be held to maturity.
B)Futures contracts can be closed out only by contract buyers.
C)Futures contracts can be closed out, but only during the week prior to maturity.
D)You cannot avoid accepting delivery once you purchase a futures contract.
E)Futures contracts can be closed out by entering a reverse trade.

Question 56

If spot-futures parity exists for an index future then the future price must equal the:

A)spot price.
B)present value of the spot price at the risk-free rate.
C)present value of the spot price at the market rate.
D)future value of the spot price at the risk-free rate.
E)future value of the spot price at the market rate.

Question 57

Which one of the following describes the typical initial margin requirements for a futures contract?

A)2% to 5% of contract value on short positions only
B)2% to 5% of contract value on both long and short positions
C)4% to 8% of contract value on long positions only
D)4% to 8% of contract value on short positions only
E)5% to 15% of contract value on both long and short positions

Question 58

Which one of the following statements is correct concerning an inverted futures market?

A)The basis will be negative.
B)The basis will equal zero.
C)The cash price will equal the futures price.
D)The cash price will exceed the futures price.
E)Arbitrage opportunities must exist.

Question 59

You currently have a long position in the 3-month futures market. Which one of the following would be a reverse trade to this position?

A)short spot
B)long spot
C)short 3-month futures
D)long 3-month futures
E)short 6-month futures

Question 60

You purchased seven September wheat futures contracts at the open today and sold those contracts at the close. What is your total profit or loss on these contracts?
$\begin{array}{llll}&\text { Contact } & \text { Open } & \text {High} & \text { Low}& \text { Close}\\\text { Sep. Corn. }&\text { 5,000 bu, cents/bu } & 615.50 & 618.25& 608.00 & 612.50\\\text { Sep. Wheat, }&\text { 5,000 bu, cents/bu } &814,00 &820.00 &808,50 & 811,00\end{array}$

A)$10,500
B)$1,050
C)$105
D)$10.50
E)$.03

Question 61

Your broker requires an initial margin of $1,500 and a maintenance margin of $1,000 on Treasury note futures. Treasury note futures contracts are based on a $100,000 par value and quoted in points and one-half of 1/32 of a point. You own one Treasury futures contract that had a closing settlement quote of 113′245 yesterday. Today, the settlement quote is 112′265. Your margin balance at yesterday's close was $1,150. All margin calls restore margin levels to their initial level. Will you receive a margin call based on today's settlement quote and, if so, for what amount?

A)no margin call
B)call for $1,037.50
C)call for $937.50
D)call for $1,100
E)call for $1,287.50

Question 62

Southern Fields has an inventory of 838,000 pounds of sugar. The firm placed a partial hedge on this inventory by selling 6 futures contracts at 9.56. The futures contracts are based on 112,000 pounds and are quoted in cents per pound. At the time the firm sold the sugar, the spot rate was 9.63. How much profit did the firm lose because of the hedge?

A)$470.40
B)$586.60
C)$688.20
D)$4,704.00
E)$5,866.00

Question 63

The spot price on orange juice is 121.55 cents per pound. The futures price is 124.30. The basis is ________ and the market is a(n)________ market.

A)−2.75; carrying-charge
B)−2.75; inverted
C)1.75; inverted
D)2.75; carrying-charge
E)2.75; inverted

Question 64

You purchased two futures contracts on soybeans at a price quote of 1344′0. The initial margin requirement is $4,750 per contract and the maintenance margin is $3,500 per contract. The contract quantity is 5,000 bushels and the price quote is in cents per bushel. What is the lowest the price quote can go before you receive a margin call?

A)1314′0
B)1315′0
C)1319′0
D)1322′0
E)1325′0

Question 65

What is the price difference on a $100,000, 10-year Treasury note futures contract between the highest and lowest prices at which the bond traded on this day? Treasury note, $100,000, pts and one-half of 1/32 of a point.
$\begin{array}{ccccc}\text { Contract } & \text { Open } & \text { High } & \text { Low } & \text { Close } \\\text { Jun, } 10 \mathrm{Yr} . \text { Treasury note } & 115^{\prime} 270 & 116^{\prime} 065 & 115^{\prime} 000 & 115^{\prime} 035\end{array}$

A)$106.50
B)$1,065.00
C)$1,203.13
D)$10,650.00
E)$12,031.30

Question 66

The T-Shirt Factory purchased seven futures contracts on cotton at a quoted price of 63.70 as a hedge against its inventory needs. At the time it actually needed the cotton, the spot price was 64.50. Cotton futures are based on 50,000 pounds and quoted in cents per pound. How much did the Shirt Factory save by hedging cotton?

A)$40
B)$400
C)$2,600
D)$2,400
E)$2,800

Question 67

What is the amount of the difference between the highest and the lowest value of a November heating oil contract on this day?
$\begin{array}{llll}\text { Contact } & \text { Open } & \text {High} & \text { Low}& \text { Close}\\\text { Nov, Heating oil, 42,000 gal, \$ }&3.6703& 3.7489 &3.6652& 3.7342& \\\text { and cents/gal}\\\text {Nov, Crude oil, 1,000 bbls, \$ and }&\text {122.71} &124.50 &122.70 &124.40 \\\text { cents/bbl}\end{array}$

A)$3,525.00
B)$3,515.40
C)$3,517.72
D)$3,549.70
E)$3,554.10

Question 68

You own four November crude oil futures contracts. What is the settlement value of those contracts at the end day?
$$\begin{array}{l}\begin{array} { l l c c c } \text { Contract } & \text { Open } & \text { High } & \text { Low } & \text { Close } \\\text { Nov, crude ail, 1, gad } & 123.01 & 124.3 & 122.93 & 123.90\end{array}\\\text { bbls. \$ and cents/bbl }\end{array}$$

A)$356,200
B)$363,600
C)$416,400
D)$445,500
E)$495,600

Question 69

The spot price for a non-dividend-paying stock is $24. The risk-free rate is 2.8% and the market rate is 10.6%. What is the 6-month futures price of this stock if spot-futures parity exists?

A)$24.33
B)$24.41
C)$24.54
D)$24.59
E)$24.70

Question 70

The spot price on cocoa is $3,840 a ton. The futures price is $3,450 a ton. The basis is ________ and the market is a(n)________ market.

A)−390; carrying-charge
B)−390; inverted
C)60; inverted
D)390; carrying-charge
E)390; inverted

Question 71

Will purchased 3 futures contracts on corn. The contract size is 5,000 bushels and the price is quoted in cents per bushel. Assume the initial margin requirement is 4.5% of the contract value. What is the amount of the initial margin if the futures quote is 624?

A)$140.40
B)$421.20
C)$1,404
D)$2,808
E)$4,212

Question 72

What is the difference between this day's high and closing prices for one 10-year Treasury note futures contract? Treasury note, $100,000, pts and one-half of 1/32 of a point.
$\begin{array}{ccccc}\text { Contract } & \text { High } & \text { Low } & \text { Close } \\\text { Jun, } 10 \mathrm{Yr} . \text { Treasury note } & 110^{\prime }25 & 112^{\prime} 05 & 109^{\prime} 80 & 110^{\prime }30\end{array}$

A)$835.00
B)$950.00
C)$1,000.00
D)$1,171.88
E)$1,218.75

Question 73

By how much did one September futures contract on wheat vary during today's trading?
$\begin{array}{llll}&\text { Contact } & \text { Open } & \text {High} & \text { Low}& \text { Close}\\\text { Dec. Corn. }&\text { 5,000 bu, cents/bu } & 620.50 & 623.50 & 613.00 & 617.00\\\text { Dec. Wheat, }&\text { 5,000 bu, cents/bu } &804,00 &810.00 &798,50 & 801,00\end{array}$

A)$.115
B)$1.15
C)$11.50
D)$115.00
E)$575.00

Question 74

You purchased four September corn futures contracts at what turned out to be the lowest price of the day and sold those contracts at today's close. What is your total profit or loss on this investment?
$\begin{array}{llll}&\text { Contact } & \text { Open } & \text {High} & \text { Low}& \text { Close}\\\text { Sep. Corn. }&\text { 5,000 bu, cents/bu } & 615.50 & 618.25& 608.00 & 612.50\\\text { Sep. Wheat, }&\text { 5,000 bu, cents/bu } &814,00 &820.00 &808,50 & 811,00\end{array}$

A)$287.50
B)$1,100
C)$2,875
D)$1,100 .
E)$14,250.

Question 75

What is the price difference on a $100,000, 5-year Treasury note futures contract between the high and low prices? Treasury note, $100,000, pts and one-quarter of 1/32 of a point.
$$\begin{array} { c l l l l l } \text { Contract } & \text { Oper } & \text { High } & \text { Low } & \text { Clage } \\\text { Jun, } 5 \text { Yr. Treasury note } & 112^{\prime} 067 & 112 ^{\prime}126 & 111 ^{\prime}175 & 111 ^{\prime} 250\end{array}$$

A)$428.13
B)$512.08
C)$787.50
D)$823.42
E)$846.88

Question 76

The 3-month futures price on a non-dividend-paying stock is $21.22. The risk-free rate is 1.5% and the market rate is 8.9%. What is the spot rate for this stock if spot-futures parity exists?

A)$21.14
B)$21.43
C)$21.51
D)$21.60
E)$21.78

Question 77

Southern Fuel has an inventory of 756,000 gallons of heating oil. The futures contracts on heating oil are based on 42,000 gallons. If the firm wishes to fully hedge its inventory, it should take which one of the following positions in heating oil futures contracts?

A)long on 16
B)long on 17
C)short on 18
D)short on 19
E)short on 20

Question 78

Your broker requires an initial margin of $4,000 per futures contract on soybeans and a maintenance margin of $3,000 per contract. Soybean futures contracts are based on 5,000 bushels and quoted in cents per bushel. Yesterday, you bought six soybean futures contracts at the closing settlement price of 1380. Today, the settlement quote is 1335. All margin calls restore margin levels to their initial margin level. Will you receive a margin call and, if so, for what amount?

A)no margin call
B)call for $2,750
C)call for $8,000
D)call for $13,500
E)call for $20,000

Question 79

What is the difference in the value of one November heating oil contract between this day's opening and closing prices?
$\begin{array}{llll}\text { Contact } & \text { Open } & \text {High} & \text { Low}& \text { Close}\\\text { Nov, Heating oil, 42,000 gal, \$ }&3.6703& 3.7489 &3.6652& 3.7342& \\\text { and cents/gal}\\\text {Nov, Crude oil, 1,000 bbls, \$ and }&\text {122.71} &124.50 &122.70 &124.40 \\\text { cents/bbl}\end{array}$

A)$6.39
B)$24.948
C)$2,494.80
D)$2,683.80
E)$5,940.00

Question 80

Your broker requires an initial margin of $6,100 per futures contract on wheat and a maintenance margin of $4,400 per contract. Wheat futures contracts are based on 5,000 bushels and quoted in cents per bushel. You sold one wheat futures contract yesterday at the closing settlement price quote of 780. Today, the settlement quote is 802. Will you receive a margin call and, if so, for what amount? All margin calls restore the margin level to its initial level.

A)no margin call
B)call for $475
C)call for $1,100
D)call for $4,750
E)call for $11,000