Futures

question 11

Multiple Choice

Futures:

• A) require people to be present in Cushing, Oklahoma, on settlement day.
• B) are standardized contracts to buy or sell specified quantities at a set price at a specific time in the future.
• C) are not tradable.
• D) specify a commodity price and a quantity to be determined later.

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Definitions:

Required Reserve

The minimum amount of funds that a bank must hold in reserve against deposits made by customers, as mandated by central banking authorities.

Excess Reserves

The amount of reserves that a bank holds beyond the required minimum, which can potentially be lent out to create new money.

Excess Reserves

The funds that banks hold over and above the required reserve ratio set by the central bank, which can be loaned out or invested.

Required Reserves

The portion of depositors' balances that banks must have on hand as cash or in reserves at a central bank, used as a measure to ensure liquidity.