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Series 3 Exam c questions and answers verified 2024
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Series 3 Exam c questions and answers verified 2024
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Series 3 ExamCommodity futures contract - correct answer ✔An agreement entered into
between a buyer and a seller on the floor of an exchange. The buyer agrees
to take delivery of the cahs commodity and pay the seller the contract price.
The seller agrees to delivery the cash commodity, for which he will receive the
contract price.
Cash forward transaction - correct answer ✔Involves an agreement between
a buyer and a selelr for delivery of a specified amount of the cash commodity
to be delivered at a specified time and price at a specified delivery point.
Cash forward contract - correct answer ✔A non-transferable agreement
between the buyer and the seller. Both parties have obligations (the seller to
deliver the commodity and the buyer to pay for it on receipt).
Futures contract - correct answer ✔Negotiated on an exchange, which is a
central market where all purchase and sale orders are channeled to a single
location. A transaction in futures is made on the floor of the exchange
between brokers who are members of the exchange.
How do cash forward contracts differ from futures contracts? - correct answer
✔The futures contract is not personally negotiated between the buyer and
seller, the cash forward contract is.
Basis grade - correct answer ✔The grade of the commodity that may be
delivered on a futures contract is determined by the exchange on which the
commodity is traded. The standard grade that may be delivered is called the
basis grade.
, "Long" - correct answer ✔The term "long" is used to describe an individual
who has an actual cash position.
"Short' - correct answer ✔The term "short" is used to describe an idividual
who has an obligation to deliver the cash commodity but does not own it. He
is short cash and will have to buy it at a later date.
Hedge - correct answer ✔The establishment of a futures position that is
opposite to a cash position. The purpose of the hedge is to establish a
temporary substitute for a cash market transaction that will be made at a
future date.
Who buys futures? - correct answer ✔The individual who has sold the cash
commodity and who is committed to buying it at a later date.
What are the exhange committees? - correct answer ✔Arbitration committee,
business conduct committee, floor committee, floor traders
Arbitration committee - correct answer ✔Settles disputes arising between
members, member firms, and the public.
Business conduct committee - correct answer ✔Investigates complaints
against members, acts to prevent price manipulation, and supervises the
conduct of members, member firms, and their employees to ensure
compliance with the appopriate rules.
Floor committee - correct answer ✔Establishes rules regarding trading on
the floor of the exchange and settles disputes that arise between members in
regard to transactions on the floor.
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