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Which of the following is a characteristic of futures contracts? They


A) are marked to the market daily.
B) can be sold short only on an uptick.
C) are handled by specialists on futures exchanges.
D) have no daily price limits.

E) A) and D)
F) B) and C)

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Approximately what percentage of futures contracts is closed by offset before the contract expires:


A) 25.
B) 50
C) 95.
D) 75.

E) C) and D)
F) None of the above

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Futures contracts were first traded on


A) stock indexes.
B) foreign currencies.
C) commodities.
D) government bonds.

E) A) and C)
F) C) and D)

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What is meant by the term "marked to the market"?

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All profits and losses are credited and ...

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Select the CORRECT statement regarding basis risk associated with futures.


A) Basis risk can be completely eliminated.
B) Although the basis fluctuates over time,it can be precisely predicted.
C) The basis must be zero on the maturity date of the contract.
D) A hedge will reduce risk as long as basis fluctuations are positive.

E) A) and B)
F) A) and D)

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