ICMA Exam FMFQ Topic 1 Question 52 Discussion

Actual exam question for ICMA's FMFQ exam

Question #: 52
Topic #: 1

[All FMFQ Questions]

Futures contracts are described as fungible (i.e. each contract is the same as all others). Why is this true?

ABecause the contract terms are negotiable

BBecause the contract periods run consecutively

CBecause the clearing house acts as a counterparty to all trades

DBecause the clearing house is allowed to run long and short positions

Show Suggested Answer

Suggested Answer: B

by Kristel at Mar 19, 2024, 07:34 PM

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Mary

1 months ago

I was going to choose D, because the clearing house sounds like it's letting its hair down and having some fun with these positions. But I guess C is the more professional answer.

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Lashandra

1 months ago

C is spot on! The clearing house's magic touch makes all these futures contracts look the same. It's like they have a fungus or something.

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Fatima

1 months ago

I was about to select B, but then I realized that consecutive contract periods don't necessarily make the contracts fungible. C is the way to go!

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Tracie

1 days ago

C) Because the clearing house acts as a counterparty to all trades

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Julianna

9 days ago

A) Because the contract terms are negotiable

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Edelmira

1 months ago

I agree, C is the right answer. The clearing house's role as the counterparty ensures that all contracts are uniform and can be easily traded.

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Ashanti

2 days ago

C) Because the clearing house acts as a counterparty to all trades

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Lucy

7 days ago

B) Because the contract periods run consecutively

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Carisa

16 days ago

A) Because the contract terms are negotiable

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Billye

2 months ago

I'm not sure about that. I think it's C) Because the clearing house acts as a counterparty to all trades. That's what makes them fungible.

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Janessa

2 months ago

The correct answer is C, because the clearing house acts as a counterparty to all trades, making each contract fungible and interchangeable.

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Nu

1 months ago

D) Because the clearing house is allowed to run long and short positions

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Chi

2 months ago

C) Because the clearing house acts as a counterparty to all trades

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Kent

2 months ago

B) Because the contract periods run consecutively

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Celeste

2 months ago

A) Because the contract terms are negotiable

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Aleisha

2 months ago

I agree with Janna. The fact that contract terms can be negotiated makes each contract the same as all others.

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Janna

2 months ago

I think the answer is A) Because the contract terms are negotiable.

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