Module Assignment For Assignment Module 5, respond to the following questions: 1. Distinguish between the terms open interest and trading volume. 2. What is the difference between a local and a future

Module Assignment

For Assignment Module 5, respond to the following questions:

1. Distinguish between the terms open interest and trading volume.

2. What is the difference between a local and a futures commission merchant?

3. Suppose that you enter into a short futures contract to sell July silver for $17.20 perounce. The size of the contract is 5,000 ounces. The initial margin is $4,000, and themaintenance margin is $3,000. What change in the futures price will lead to a margin call?What happens if you do not meet the margin call?

4. Suppose that in September 2012 a company takes a long position in a contract on May2013 crude oil futures. It closes out its position in March 2013. The futures price (perbarrel) is $68.30 when it enters into the contract, $70.50 when it closes out its position,and $69.10 at the end of December 2012. One contract is for the delivery of 1,000 barrels.What is the company’s total profit? When is it realized? How is it taxed if it is (a) a hedgerand (b) a speculator? Assume that the company has a December 31 year-end.

5. What does a stop order to sell at $2 mean? When might it be used? What does a limitorder to sell at $2 mean? When might it be used?

6. What is the difference between the operation of the margin accounts administered by aclearing house and those administered by a broker?7. What differences exist in the way prices are quoted in the foreign exchange futuresmarket, the foreign exchange spot market, and the foreign exchange forward market?

8. The party with a short position in a futures contract sometimes has options as to theprecise asset that will be delivered, where delivery will take place, when delivery will takeplace, and so on. Do these options increase or decrease the futures price? Explain yourreasoning.

9. What are the most important aspects of the design of a new futures contract?

10. Explain how margins protect investors against the possibility of default.

Show more

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more