Dairy Futures and Options Tutorial

Futures Self Study Questions

For each question, click on the answer you think is correct. The box below each question indicates whether the selected response is correct. To see a listing of the correct answers, click on after each question.

Question 1
Which describes the Class III contracts at the CME?

contracts are traded every month
it is a cash settle contract
each contract is for 200,000 lbs. of milk
all of the above

Question 2
Which describes the Class III contracts at the CME?

milk is assumed to have 3.7% fat
the protein content is assumed to be 3.0%
milk is assumed to have the FMMO Class III standard profile
both (a) and (b) are true

Question 3
A settle price is:

the current cash price for a particular commodity
the cost of purchasing a futures contract
the last price paid for a particular futures contract on any trading day
none of the above

Question 4
A cash settle contract means:

that the price for a cash commodity has been set
that instead of delivery, if a futures contract expires than a cash price is used to close out open positions
the holder of a futures contract has the choice of making delivery if the contract expires
no margin account needs to be established

Question 5
The term bull market refers to:

a market in which prices are rising
a market where the basis is negative
a market where prices are falling
none of the above

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