Exam (elaborations)
Series 3 4 questions and answers verified 2024
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Series 3 4 questions and answers verified 2024
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Series 3 [Futures Trading Theory andBasic Functions Terminology]
Cash and futures prices tend to converge at or during:
A. The delivery month.
B. The last three months of trading.
C. Times of supply shortage.
D. When a new contract is first listed for trading. - correct answer ✔A
During the delivery period, futures contracts can be closed out by offset or by
making or taking delivery. As a result, the prices of the maturing futures
contract and the underlying cash item become aligned, i.e., converge to each
other.
Who determines the size, grades, delivery locations and delivery months of a
futures contract?
A. The CFTC
B. The exchange on which the contract is traded
C. The USDA
, D. The National Futures Association - correct answer ✔B
Exchange rules set the standardized terms and conditions of all futures
contracts.
In contrast to futures, stocks or equities:
A. Have price and position limits.
B. Have expiration dates.
C. Have a short for every long.
D. Are not regulated by the CFTC.
E. All of the above. - correct answer ✔D
Futures, but not stocks, have price and position limits, expiration dates, and a
long for every short. U.S. stock markets are regulated by the Securities and
Exchange Commission (SEC), while futures are regulated by the Commodity
Futures Trading Commission (CFTC).
A futures contract is a legal agreement between a buyer and seller governing
the future delivery of the specified commodity, financial instrument, index or
other underlying instrument.
A. True.
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