A Futures Contract

question 66

Multiple Choice

A futures contract

• A) is not exchange traded, therefore does not have a ready market value.
• B) exposes the contracting party to credit risk.
• C) does not require a margin account to be established.
• D) is standardized as to amounts and dates.

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Definitions:

Equipment

Tangible assets used in the operation or production process of a business, such as machinery, computers, and tools.

Interest Rate

The percentage of a loan that is applied as interest for the borrower, usually shown as an annual rate.

Account

A record summarizing all the transactions pertaining to a particular item in the financial statements.

Annual Rate

The interest rate stated on a yearly basis, often used in the context of savings accounts, loans, or investments to represent the yearly cost or return.