Futures Contracts Trade with Every Month as a Delivery Month

question 17

Multiple Choice

Futures contracts trade with every month as a delivery month.A company is hedging the purchase of the underlying asset on June 15.Which futures contract should it use?

• A) The June contract
• B) The July contract
• C) The May contract
• D) The August contract

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Definitions:

Past Service Costs

Costs related to pension plan benefits earned by employees in prior periods, which are recognized in the current period due to plan amendments or changes.

Actuarial Gains and Losses

Gains or losses that arise from the adjustment of assumptions or the application of actuarial models differently over time in evaluating a company's pension liabilities.

Projected Benefit Obligation

Represents an estimate of the total amount to be paid to participants in a defined benefit pension plan, based on employees' service and salary history.

Prior Service Cost

The cost associated with retroactive benefits granted in a pension plan amendment, recognized over the service lives of affected employees.