The Seller of a Futures Contract

question 50

Multiple Choice

The seller of a futures contract

• A) must make delivery before receiving any monies on the contract.
• B) receives the entire contract amount at the time the contract is made.
• C) has the option of canceling the contract the following day if the price is not acceptable to him/her.
• D) is legally bound to make delivery of the specified item on the specified day.

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Definitions:

Yields

The earnings generated and realized on an investment over a particular period, expressed as a percentage of the investment's cost.

Economy

The economy represents the collective system of production, distribution, and consumption of goods and services among individuals, businesses, and governments within a specific region or country.

Bond Ratings

These are assessments provided by credit rating agencies on the creditworthiness of bond issuers, indicating the risk level of bonds defaulting.

Moody's Baa

Moody's Baa rating denotes bonds that are considered medium-grade, subject to moderate credit risk, and as such, investors should investigate further.