10 free, exam-style Series 3 National Commodities Futures (Series 3) practice questions with answers and explanations. No signup required. Work through them below, then take the full free Series 3 practice test to study every exam domain.
A speculator is long one futures contract. The account's equity falls below the maintenance margin level, and the broker issues a margin call. To satisfy the call, the customer must deposit funds sufficient to bring the account back up to:
Correct answer: C - the initial margin level
A grain elevator owns cash corn in storage and has hedged by selling corn futures. Between placing the hedge and lifting it, the basis strengthens (narrows). The effect on the elevator is that it:
Correct answer: B - realizes a better net selling price than the hedge first implied
A customer buys one put option on a soybean future. The strike price is $13.00 per bushel and the premium paid is $0.40 per bushel. Ignoring commissions, what is the customer's breakeven price at expiration?
Correct answer: A - $12.60 per bushel
A new client transferring from an equities firm describes the deposit required to open a futures position as a 'down payment' that finances the rest of the contract on credit. The most accurate correction is that futures margin is:
Correct answer: D - a good-faith performance bond ensuring the holder can meet obligations
In May, a soybean farmer expects to harvest and sell beans in the fall. To hedge, the farmer sells November futures at $13.20. At harvest, the farmer sells the cash crop at $12.80 and simultaneously buys back the November futures at $12.50. What net price per bushel does the farmer effectively receive?
Correct answer: C - $13.50 per bushel
A firm solicits futures orders from customers but operates under a guarantee agreement with a single futures commission merchant (FCM) that assumes responsibility for its obligations. What is this guaranteed introducing broker's minimum adjusted net capital requirement?
Correct answer: D - None - the guarantor FCM assumes its financial responsibility
A commodity trading advisor (CTA) has been trading a program with actual client results for the past eight months. Under NFA Compliance Rule 2-29, the CTA's promotional material for that program may:
Correct answer: B - not present hypothetical performance results for that program
An associated person (AP) who is not registered as a commodity trading advisor wishes to exercise discretion over a customer's futures account. Apart from obtaining the customer's written authorization, the AP generally must have been:
Correct answer: A - continuously registered as an AP for at least the prior two years
A trader holds a long futures position and, to protect against a decline while keeping upside potential, buys a put option on the same future. This combined position has a profit-and-loss profile equivalent to a:
Correct answer: C - long call option
A customer signed a pre-dispute arbitration agreement when opening a futures account. A dispute later arises, and the firm notifies the customer of its intent to arbitrate. To instead pursue a CFTC reparations proceeding, within how many days of receiving that notice must the customer notify the firm of that election?
Correct answer: B - 45 days
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