Two Key Features of Futures Contracts That Make Them More

question 3

Multiple Choice

Two key features of futures contracts that make them more in demand than forward contracts are:

• A)futures are traded on exchanges and must be marked to the market.
• B)futures contracts allow flexibility in delivery dates and provide a liquid market for netting
• Positions.
• C)futures are marked to the market and allow delivery flexibility.
• D)futures are traded in liquid markets and are marked to the market.
• E)None of the above.

Comprehend the distribution of the world's income among its population.

Understand the demographic and economic distinctions between industrially advanced countries (IACs) and developing/less developed countries (DVCs).

Recognize the criteria for classifying countries based on income levels and identify examples of low-income countries.

Assess the factors contributing to and challenges faced by low-income DVCs including income gaps, population growth, and investment issues.

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Definitions:

Positive NPV Projects

Projects with a net present value greater than zero, indicating they are expected to generate profit over their lifetime.

Target Cash Balance

The optimal amount of cash that a company aims to hold for operational and precautionary purposes.

Carrying Costs

Expenses associated with holding or carrying inventory, including storage, insurance, taxes, and opportunity costs.

Shortage Costs

Costs associated with the unavailability of inventory or goods, leading to lost sales, backorders, or production delays.