A Futures Contract

question 91

Multiple Choice

A futures contract

• A) gives the owner the right,but not the obligation,to buy shares of a stock at a specified price within the time limits of the contract.
• B) gives the owner the right,but not the obligation,to sell shares of a stock at a specified price within the time limits of the contract.
• C) is a contract in which the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price.
• D) gives the owner the right,but not the obligation,to buy or sell shares of a stock at a specified price within the time limits of the contract.

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Definitions:

Rectangular

Pertaining to a shape or object whose surface has four right angles and the opposite sides are parallel and equal in length.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values; quantifies the degree to which values differ from the average value.

Normal Distribution

A bell-shaped curve that represents the distribution of data around a mean, showing that data near the mean are more frequent in occurrence.

Weights

Measures of the heaviness of objects or individuals, often used in statistical analysis to consider the importance or influence of different observations.