GSC ABC School: Fundamentals

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| By Cooperlatham

Cooperlatham

Community Contributor

Quizzes Created: 3 | Total Attempts: 232

Questions: 10 | Attempts: 65 | Updated: Jun 29, 2023

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Questions and Answers

1.

With a limit order, your order cannot be executed higher than a buy price you indicate, or lower than the indicated selling price.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
A limit order allows you to specify the maximum price you are willing to pay for a buy order or the minimum price you are willing to accept for a sell order. This means that your order will only be executed at the price you indicate or better. If the buy price is higher than your limit or the selling price is lower than your limit, the order will not be executed. Therefore, the statement is true.

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2.

When you hold a futures position, short or long, you must maintain a certain amount of funds in you brokerage account as "good faith" money to ensure performance, true or false?
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When holding a futures position, whether it is short or long, it is necessary to maintain a certain amount of funds in the brokerage account as "good faith" money. This ensures that the trader has enough funds to fulfill their obligations and perform according to the terms of the futures contract. This requirement is known as the margin requirement and helps to mitigate the risk of default. Therefore, the statement that you must maintain a certain amount of funds in your brokerage account as "good faith" money to ensure performance is true.

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3.

Which of the below choices is the correct way to place the following spread order? Ex. To roll 50 long May'13 soybean futures to the July'13 at the market
- A.
  
  Sell 50 July'13 soybeans, Buy 50 May'13 soybeans at the market
- B.
  
  Buy 50 July'13 soybeans, Sell 50 May'13 soybeans at the market
- C.
  
  Sell 50 July'13 soybeans, Buy 50 May'13 corn at the market
- D.
  
  Buy 50 May'13 soybeans, Sell 50 July'13 soybeans at the market
Correct Answer
B. Buy 50 July'13 soybeans, Sell 50 May'13 soybeans at the market

Explanation
The correct way to place the spread order is to Buy 50 July'13 soybeans and Sell 50 May'13 soybeans at the market. This means that the trader wants to close their position in the May'13 soybean futures and open a new position in the July'13 soybean futures. By buying the July'13 soybeans and selling the May'13 soybeans, the trader is rolling their position forward in time.

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4.

is the difference between cash price and futures price

Correct Answer
Basis
5.

Select all of the below choices that are essential to placing a futures order
- A.
  
  Order type (Day, MKT, GTC, etc.)
- B.
  
  Number of contracts
- C.
  
  Amount of bushels
- D.
  
  Buy or sell
- E.
  
  Contract month
- F.
  
  Commodity
- G.
  
  Basis amount
Correct Answer(s)
A. Order type (Day, MKT, GTC, etc.)
B. Number of contracts
D. Buy or sell
E. Contract month
F. Commodity

Explanation
The given answer includes all the essential choices required to place a futures order. The order type determines the duration and conditions of the order. The number of contracts specifies the quantity of contracts to be bought or sold. The choice of buying or selling determines the direction of the trade. The contract month specifies the specific month in which the contract expires. The commodity refers to the specific asset or product being traded. The other choices, such as amount of bushels and basis amount, are not necessary for placing a futures order.

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6.

An order that remains unexecuted at the end of the trading session is known as a(n)
- A.
  
  Broken order
- B.
  
  Fill
- C.
  
  Limit order
- D.
  
  Unable
Correct Answer
D. Unable

Explanation
An order that remains unexecuted at the end of the trading session is known as "unable" because it implies that the order was not able to be executed within the given timeframe. This could be due to various reasons such as insufficient liquidity, price restrictions, or market conditions that prevented the order from being filled.

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7.

If you sell grain to a feed customer or other buyer, what do you do with the futures contracts during a futures exchange versus cash?
- A.
  
  Buy
- B.
  
  Sell
- C.
  
  Give
- D.
  
  Take
Correct Answer
D. Take

Explanation
When selling grain to a feed customer or other buyer, you would "take" the futures contracts during a futures exchange versus cash. This means that you would choose to hold onto the futures contracts rather than exchanging them for cash. By taking the futures contracts, you can potentially benefit from any price fluctuations in the future and secure a better selling price for your grain.

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8.

What is missing from the following futures open order? Sell 10 November'13 beans 12.76
- A.
  
  Contract year
- B.
  
  Buy or sell
- C.
  
  Order type (Day, GTC)
- D.
  
  Price
Correct Answer
C. Order type (Day, GTC)

Explanation
The missing element from the given futures open order is the order type (Day, GTC). The order type specifies the duration of the order. "Day" means that the order will be valid only for the current trading day, while "GTC" (Good Till Cancelled) means that the order will remain active until it is filled or manually cancelled by the trader.

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GSC ABC School: Fundamentals

With a limit order, your order cannot be executed higher than a buy price you indicate, or lower than the indicated selling price.

When you hold a futures position, short or long, you must maintain a certain amount of funds in you brokerage account as "good faith" money to ensure performance, true or false?

Which of the below choices is the correct way to place the following spread order? Ex. To roll 50 long May'13 soybean futures to the July'13 at the market

is the difference between cash price and futures price

Select all of the below choices that are essential to placing a futures order

An order that remains unexecuted at the end of the trading session is known as a(n)

If you sell grain to a feed customer or other buyer, what do you do with the futures contracts during a futures exchange versus cash?

What is missing from the following futures open order? Sell 10 November'13 beans 12.76