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PRMIA Exam 8006 Topic 3 Question 100 Discussion
Actual exam question for
PRMIA's
8006 exam
Question #: 100
Topic #: 3
[All 8006 Questions]
Topic #: 3
What is the notional value of one equity index futures contract where the value of the index is 1500 and the contract multiplier is $50:
Suggested Answer:
A
The correct answer is the index value times the contract size, in this case 1500 x 50.
One way to think about index futures is this: Consider equity index trading as trading in the shares of a company whose share price is equal to a number of dollars which is the same as the index. If the 'contract multiplier' for a index futures contract is 50, that means the futures contract is for 50 shares of such a fictitious company. Therefore the notional value of the contract will be 15000 x 50, and Choice 'a' is the correct answer.
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