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series 3 extra review questions and answers verified 2024
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series 3 extra review questions and answers verified 2024
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series 3 extra reviewa grain elevator operator who has purchased grain will hedge by - correct
answer ✔by selling futures.
-his intention in selling futures is to protect himself against a price decline on
his inventory.
the price of a futures contract bought or sold is determined by the - correct
answer ✔-open bids and offers on the exchange floor
-
the CFTC requires records to be kept for how many years - correct answer
✔5 years
if the price of a commodity becomes extremely volatile what happens to the
margin and leverage - correct answer ✔the margin is increased and the
leverage is decreased
fundamental analysts are concerned with - correct answer ✔supply and
demand factors relating th the commodity plus basic economic and govt
factors
the max number of contracts, either long or short in any one futures month or
in all futures months combined which may be held open or be controlled by
any one person, as prescribed by the CFTC is - correct answer ✔the
speculative position limit
an ascending triangle indicates - correct answer ✔that the price of a
commodity future is rising. If there is a breakout in an ascending triangle, this
is an indication that the price will advance
, the FCM may consider an account to be in a hedge account only if - correct
answer ✔the account is one that handles the actual cash commodity in the
conduct of its business
-in order to be considered a hedger, the account must be a producer or user
of the cash commodity
a customer offsets a position on the current delivery month and
simultaneously takes a new position in a deferred futures month. this type of
order is called - correct answer ✔a switch order
-switch order is an order to liquidate a futures contract and assume a new
position in the same commodity in a later delivery month
a stop order to buy is - correct answer ✔-entered above the current market
price
-would be entered to limit a loss if the price of a commodity should advance
all futures trading in the puts or in the trading rings of an exchange must be
done by - correct answer ✔the open outcry
a buying hedge(purchase of futures) would be used by - correct answer ✔-
an exporter to protect his later purchase from price advance
- is established by an individual who is short the basis (short the cash
commodity)
an order to sell a futures contract at 10.35 is - correct answer ✔- a limit order
-the customer is instructing the broker to sell the contract at a price of 1-.35 or
higher
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