Share-Index Futures Contracts Are

question 1

Multiple Choice

Share-index futures contracts are:

• A)futures that derive their value from averaging the prices of all underlying shares included in the share index.
• B)futures that derive their value from averaging the prices of a basket of underlying shares included in the share index.
• C)currently only traded in the US.
• D)the least actively traded contracts in future markets.

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Definitions:

Normal Profits

The level of profit that is necessary to cover the costs of a firm, including the opportunity costs of capital, ensuring the firm remains in business.

Implicit Cost

The opportunity cost equal to what a firm must give up in order to use resources it already owns, without paying rent or purchasing them.

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs.

Accountants

Professionals responsible for managing and auditing financial records, ensuring accuracy and compliance with legal requirements.