One Futures Contract Is Traded Where Both the Long and Short

question 4

Multiple Choice

One futures contract is traded where both the long and short parties are closing out existing positions.What is the resultant change in the open interest?

• A) No change
• B) Decrease by one
• C) Decrease by two
• D) Increase by one

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Definitions:

Operating Loss

A situation where a company's operating expenses exceed its revenues, indicating it is not making a profit from its core activities.

Income Tax Rate

The fraction of earnings subject to taxation for either individuals or corporations.

Current Income Tax Liability

The amount of income tax that a company is obligated to pay to tax authorities within the current year.

Deferred Tax Asset

An accounting term that refers to a situation where a business has paid more taxes or estimates that it will pay more taxes than it will owe.