You have already completed the quiz before. Hence you can not start it again.
Quiz is loading...
You must sign in or sign up to start the quiz.
You have to finish following quiz, to start this quiz:
Results
0 of 10 questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 points, (0)
Categories
Not categorized0%
1
2
3
4
5
6
7
8
9
10
Answered
Review
Question 1 of 10
1. Question
Which of the following statements is true regarding floor broker and floor trader?
Correct
Floor broker and floor trader
A floor trader (also known as a local) is a person who is granted trading privileges by an exchange and personally engages in open outcry trading on the floor of the exchange for his or her own account. A floor broker (also sometimes known as a commission house broker) is an individual with the same trading privileges as a floor trader who acts on behalf of others. Floor brokers may be employed by a brokerage firm. They may execute orders only for the customers of the firm, or may operate independently (for numerous brokerages).
Incorrect
Floor broker and floor trader
A floor trader (also known as a local) is a person who is granted trading privileges by an exchange and personally engages in open outcry trading on the floor of the exchange for his or her own account. A floor broker (also sometimes known as a commission house broker) is an individual with the same trading privileges as a floor trader who acts on behalf of others. Floor brokers may be employed by a brokerage firm. They may execute orders only for the customers of the firm, or may operate independently (for numerous brokerages).
Question 2 of 10
2. Question
From the statements below regarding forward contracts and futures contracts, which one seems to be the most appropriate to you?
Correct
Forward contracts and futures contracts
A forward contract represents an agreement between a buyer and a seller regarding the terms of sale of specific goods to be delivered on a specific future date. A forward contract can be applied to any agreed upon commercial transaction, the terms and conditions of which are unique to and used only by the buyer and the seller. The motivation of both the buyer and the seller is typically to lock in the terms and conditions to provide certainty of decision. A futures contract is similar to a forward contract in that it also represents an agreement between a buyer and a seller for specific goods, and is settled on a future date. However, futures contracts differ from forward contracts in that they contain standardized terms and conditions, and are typically traded on an exchange.
Incorrect
Forward contracts and futures contracts
A forward contract represents an agreement between a buyer and a seller regarding the terms of sale of specific goods to be delivered on a specific future date. A forward contract can be applied to any agreed upon commercial transaction, the terms and conditions of which are unique to and used only by the buyer and the seller. The motivation of both the buyer and the seller is typically to lock in the terms and conditions to provide certainty of decision. A futures contract is similar to a forward contract in that it also represents an agreement between a buyer and a seller for specific goods, and is settled on a future date. However, futures contracts differ from forward contracts in that they contain standardized terms and conditions, and are typically traded on an exchange.
Question 3 of 10
3. Question
Regarding normal market and inverted market, which of the following statements is true?
Correct
Normal market and inverted market
A normal market can be characterized as one in which the near-term price is less than the long- term or future price. The higher long-term or future price reflects the cost of carry. That is, the longer the term of the contract is, the higher the storage, insurance, and financing costs will be. An inverted market is one with pricing characteristics that are the reverse of a normal market. That is, the prices of near-term contracts are higher than those of contracts with longer maturities. In effect, the cost of carry is negative. Whether a market is normal or inverted is often a function of the effect of economic conditions on the underlying cash commodity.
Incorrect
Normal market and inverted market
A normal market can be characterized as one in which the near-term price is less than the long- term or future price. The higher long-term or future price reflects the cost of carry. That is, the longer the term of the contract is, the higher the storage, insurance, and financing costs will be. An inverted market is one with pricing characteristics that are the reverse of a normal market. That is, the prices of near-term contracts are higher than those of contracts with longer maturities. In effect, the cost of carry is negative. Whether a market is normal or inverted is often a function of the effect of economic conditions on the underlying cash commodity.
Question 4 of 10
4. Question
Which of the following statements is false regarding Limit up/down and locked limit?
Correct
Limit up/down and locked limit
In order to control price volatility, exchanges set limits on the amount a contract price can increase or decrease during a given trading period, usually one day. The limit is defined as the previous trading period settlement price plus and minus a marginal amount. For example, a recent settlement price for February ethanol contracts on the CME was $2.205. The daily price fluctuation limit was $0.30. Therefore, the minimum and maximum prices set for the following day were $1.905 and $2.505, respectively.
A limit is said to be locked when the price during any given trading session has reached either the lower or upper limit.
Incorrect
Limit up/down and locked limit
In order to control price volatility, exchanges set limits on the amount a contract price can increase or decrease during a given trading period, usually one day. The limit is defined as the previous trading period settlement price plus and minus a marginal amount. For example, a recent settlement price for February ethanol contracts on the CME was $2.205. The daily price fluctuation limit was $0.30. Therefore, the minimum and maximum prices set for the following day were $1.905 and $2.505, respectively.
A limit is said to be locked when the price during any given trading session has reached either the lower or upper limit.
Question 5 of 10
5. Question
Which of the following statements is true regarding position trader and day trader?
Correct
Position trader and day trader
A market position can be described as either a single contract or multiple contracts that, collectively, create an open position (either long or short) for the purpose of executing a hedging or speculative strategy. The holder of such positions can be described as a position trader. In contrast, a day trader typically has no market position at the end of the trading day, as all trades are initiated and subsequently offset on the same day.
Incorrect
Position trader and day trader
A market position can be described as either a single contract or multiple contracts that, collectively, create an open position (either long or short) for the purpose of executing a hedging or speculative strategy. The holder of such positions can be described as a position trader. In contrast, a day trader typically has no market position at the end of the trading day, as all trades are initiated and subsequently offset on the same day.
Question 6 of 10
6. Question
From the statements below regarding tender and retender, which one seems to be the most appropriate to you?
Correct
Tender and retender
A tender is a formal notice required by the rules of an exchange or a clearinghouse whereby a seller indicates his or her intention to make a delivery to a buyer. The notice is provided to the clearinghouse, which then assigns it to a buyer. It is then the responsibility of the seller to arrange for the delivery, which should also comply with the rules of the exchange or clearinghouse. A retender occurs when an exchange permits the recipient of a delivery notice to immediately sell an offsetting futures contract to clear the account position. The buyer would then return the notice to the clearinghouse. In effect, the buyer would retender the previously tendered notice. The clearinghouse would then assign the delivery to another buyer.
Incorrect
Tender and retender
A tender is a formal notice required by the rules of an exchange or a clearinghouse whereby a seller indicates his or her intention to make a delivery to a buyer. The notice is provided to the clearinghouse, which then assigns it to a buyer. It is then the responsibility of the seller to arrange for the delivery, which should also comply with the rules of the exchange or clearinghouse. A retender occurs when an exchange permits the recipient of a delivery notice to immediately sell an offsetting futures contract to clear the account position. The buyer would then return the notice to the clearinghouse. In effect, the buyer would retender the previously tendered notice. The clearinghouse would then assign the delivery to another buyer.
Question 7 of 10
7. Question
Which of the following statements is false regarding spot price and futures price?
Correct
Spot price and futures price
The term spot is used to describe either the actual market for immediate purchase and delivery of a commodity or the nearest delivery month of a futures contract. The spot price, then, is the actual cash price applicable to a transaction. The futures price is the price to be paid by a buyer (and received by a seller) for delivery of a commodity on a future date. In a normal market, the price of a futures contract is equal to the spot or cash price plus the cost of carry.
Incorrect
Spot price and futures price
The term spot is used to describe either the actual market for immediate purchase and delivery of a commodity or the nearest delivery month of a futures contract. The spot price, then, is the actual cash price applicable to a transaction. The futures price is the price to be paid by a buyer (and received by a seller) for delivery of a commodity on a future date. In a normal market, the price of a futures contract is equal to the spot or cash price plus the cost of carry.
Question 8 of 10
8. Question
Regarding warehouse receipt, which of the following statements is true?
Correct
Warehouse receipt
For contracts that are held to expiry and require physical delivery, the clearinghouse may operate as the facilitator of the delivery process and assume the role of depository for warehouse receipt. The actual warehouse receipt document(s) is/are issued by a warehouse that is recognized by the clearinghouse as being certified for such delivery purposes. The document is provided to the clearinghouse to complete the delivery process and authorize release of payment to the seller as provided by the purchaser.
Incorrect
Warehouse receipt
For contracts that are held to expiry and require physical delivery, the clearinghouse may operate as the facilitator of the delivery process and assume the role of depository for warehouse receipt. The actual warehouse receipt document(s) is/are issued by a warehouse that is recognized by the clearinghouse as being certified for such delivery purposes. The document is provided to the clearinghouse to complete the delivery process and authorize release of payment to the seller as provided by the purchaser.
Question 9 of 10
9. Question
From the statements below regarding call and put, which one seems to be the most appropriate to you?
Correct
Call and put
A call option represents the right to purchase a specified commodity or asset at a specified price within a specified time frame. A trader who purchases a call is said to establish a long market position. A trader who sells a call is said to establish a short market position. A put option represents the right to sell a specified commodity or asset at a specified price within a specified time frame. A trader who buys a put is said to establish a short position with respect to the underlying asset. A trader who sells a put is said to establish a long position with respect to it. This is because a “long position” is one that wants the underlying asset’s price to rise, while a short position wants it to decrease.
Incorrect
Call and put
A call option represents the right to purchase a specified commodity or asset at a specified price within a specified time frame. A trader who purchases a call is said to establish a long market position. A trader who sells a call is said to establish a short market position. A put option represents the right to sell a specified commodity or asset at a specified price within a specified time frame. A trader who buys a put is said to establish a short position with respect to the underlying asset. A trader who sells a put is said to establish a long position with respect to it. This is because a “long position” is one that wants the underlying asset’s price to rise, while a short position wants it to decrease.
Question 10 of 10
10. Question
Which of the following statements is true regarding conversion?
Correct
Conversion
The combination of long and short option positions, as well as similar combinations of both options and futures positions, creates what are known as synthetic positions. Conversion is said to occur when market makers identify a price discrepancy and take an opposite position, which, in turn, causes the pricing to revert to equality. Traders will sell an overpriced call and buy (take a long position) on the futures and the put. A reverse conversion is said to occur when traders buy an underpriced call and sell the futures and the put.
Incorrect
Conversion
The combination of long and short option positions, as well as similar combinations of both options and futures positions, creates what are known as synthetic positions. Conversion is said to occur when market makers identify a price discrepancy and take an opposite position, which, in turn, causes the pricing to revert to equality. Traders will sell an overpriced call and buy (take a long position) on the futures and the put. A reverse conversion is said to occur when traders buy an underpriced call and sell the futures and the put.
Hi, Aiden here, co-founder of Certdemy. I hope you liked it and enjoy our service. We are a group of professional who has been in your position right now – taking exams.
You have already paid for the expensive exam registration fee and it makes no sense to pay for another exam prep tool just because you are working hard on your career for your family and future.
That is why we provide all the top-notch, premium practice questions which are normally charged at over USD200 per exam preparation tools to you completely for free.
But we need your help and I am not asking for a donation. It comes with a huge running cost to hire exam professionals to craft the questions, pay for the domain, hosting fee, and web maintenance.
If this is not much to ask for, can you spend 5 seconds of your time and share our service to your favorite forums, friends & colleagues so that they can also enjoy our service and help us keep this place running? Thanks so much in advance if you have already done so!
To your success,
Aiden D. Lucas We earn a commission for each qualified sales with no additional cost to you as amazon associate