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Which of the Following Characteristics Apply to Futures Contracts

question 40

Multiple Choice

Which of the following characteristics apply to futures contracts?
I. Futures contracts are an important tool to control risk.
II. Futures contracts are highly risky and involve speculation.
III. Futures contracts specify both the quantity and the quality of the item.
IV. The buyer must hold the contract until maturity.


Definitions:

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or business activity.

Monthly Rent

A regular payment made for the use of property or land on a monthly basis.

Administrative Costs

Expenses related to the general operation of a business rather than production, sales, or other specific functions.

Net Realisable Value Method

An accounting technique used to calculate the value of an inventory or asset, minus any costs associated with its sale or disposal.

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