One Difference Between Futures and Options Contracts Is

question 38

Multiple Choice

One difference between futures and options contracts is

• A)funds change hands daily in the case of options but not with futures.
• B)funds change hands daily in the case of futures, but not with options.
• C)in the case of futures funds only change hands when they are exercised.
• D)futures are designed to reduce risk while options are not.

---

Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a business, including materials and labor costs.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted for the investor's share of the investee's profit or loss and dividends received.

Intra-entity Gross Profit

Profits resulting from transactions within the same entity, often requiring adjustment during the consolidation process for accurate financial reporting.

January 1 Retained Earnings

The amount of net income left over for a company from the previous fiscal year, reported at the start of the new year on January 1.