Futures Contracts

question 94

Multiple Choice

Futures contracts:

• A) Are identical to forward contracts except for the length of time until the settlement date.
• B) Provide an option to purchase an asset at a specified price on the settlement date.
• C) Are marked to the market on a daily basis.
• D) Cannot be resold.
• E) Are limited to contracts on financial assets.

Recognize the requirements for the disclosure of liabilities in financial statements.

Comprehend the calculation and significance of the times interest earned ratio.

Identify liabilities associated with employment, including payroll and benefits.

Understand the treatment and reporting of corporate income tax liabilities.

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Definitions:

Fifteen-Year Bonds

Fixed income securities that mature or become due for repayment fifteen years after their issue date.

Capital Market

A financial market in which long-term debt or equity-backed securities are bought and sold, facilitating the raising of capital.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed.

Rate Difference

The disparity in interest rates, often used in the context of comparing rates between two different financial products or within different markets.