1. Which of the following statements is an example of a futures market transaction?
a. An investor purchases 100 shares of IBM hoping to sell it in two years for a profit
b. A company purchases an option to buy 1000 barrels of oil anytime between now and the end of the year.
c. A company agrees to purchase 1000 barrels of oil for delivery in six months at a price of $70 per barrel.
d. An executive has a portion of his current year salary deferred until he retires.
2. Private placements usually have several advantages associated with them, but also tend to suffer from specific disadvantages. Which of the following is a disadvantage of a private placement when compared to other methods of selling new securities?
a. strictly standardized features/terms
b. higher interest costs
c. reduced flotation costs
d. avoidance of registration with the SEC