Which of the Following Statements Are true

question 78

Multiple Choice

Which of the following statements are true?

• A) Futures contracts have less liquidity risk and credit risk than forward contracts.
• B) Futures contract prices are strongly linked to the prevailing level of the underlying spot index.
• C) Futures contract decrease in price, the further forward in time the delivery date is set.
• D) All of the above.
• E) None of the above.

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Definitions:

Variable Inputs

Resources used in production that vary with the level of output, such as raw materials and labor hours.

Marginal Revenue

The additional income received from selling one more unit of a good or service; it is a cornerstone concept in microeconomics for optimizing profit.

Marginal Product

The additional output that results from the use of one more unit of a variable input, assuming all other inputs remain constant, often reflecting the efficiency of the input.

Fringe Benefits

Additional benefits offered to employees on top of their salaries, such as health insurance, retirement plans, and paid vacation.