Series 3: Chapter 1 Practice Questions

Chapter 1 Practice Questions

1. 1. Which of the following was the first act to impose federal regulations on the brokers trading on the floors of commodity exchanges?
2. A. Commodity Futures Trading Commission Act of 1974
3. B. Grain Futures Act
4. C. Commodity Exchange Act of 1936
5. D. Shad-Johnson Accord
6. 2. Which of the following is not correct regarding futures exchanges?
7. A. The Chicago Mercantile Exchange (CME) trades mostly in foreign exchange and stock index futures.
8. B. The Chicago Board of Trade (CBOT) focuses on agricultural commodity and interest rate futures.
9. C. The New York Mercantile Exchange (NYMEX) focuses on energy futures and metals.
10. D. The New York Board of Trade (NYBOT) focuses exclusively on the grains futures markets.
11. 3. Which of the following is not classified as a commodity?
12. A. Livestock
13. B. Automobiles
14. C. Corn
15. D. Oil
16. 4. Which of the following is a security?
17. A. Bond
18. B. Futures
19. C. Options
20. D. Swaps
21. 5. Which is true about the difference between forward contracts and futures contracts?
22. A. Forward contracts have greater counterparty risk than futures contract.
23. B. Forward contracts are more appropriate for small transactions than futures contracts.
24. C. Forward contracts are subject to more regulation than futures contracts.
25. D. Forward contracts are legal in fewer states than futures contracts.
26. 6. All of the following are standardized on futures contracts except:
27. A. The number of contracts and their price
28. B. The contract grade
29. C. The unit size and tick size
30. D. The trading hours and last trading day
31. 7. If you have a short position on something, you hope that its value will:
32. A. Rise
33. B. Fall
34. C. Stay the same
35. D. Change in either direction
36. 8. Which of the following best describes exce