Standardization of Derivative Contracts

question 33

Multiple Choice

Standardization of derivative contracts

• A)increases their liquidity.
• B)is the rule with respect to contracts whose underlying asset is a financial security, but not for contracts whose underlying asset is a commodity.
• C)is the rule with respect to contracts whose underlying asset is a commodity, but not for contracts whose underlying asset is a financial asset.
• D)has been proposed many times by financial analysts, but has not yet been carried out by the SEC.

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Definitions:

Stroboscopic Motion

An optical illusion where discrete images appear to be moving due to rapid sequential presentation, similar to motion pictures.

Milliseconds

Units of time equal to one thousandth (1/1000) of a second, often used to measure very short time intervals.

Vertical Lines

Lines that run straight up and down, creating a sense of height and structure within a visual composition.

Shepard's Table Illusion

A visual illusion where two tables appear to be different shapes but are in fact identical; highlighting how context can influence perception.