A Futures Contract Is an Agreement

question 28

Multiple Choice

A futures contract is an agreement:

• A)that obligates a corporation to issue additional securities on a specified date in the future.
• B)to exchange financial assets on a specified date in the future with the price determined on that date.
• C)to deliver goods today in exchange for an agreed upon payment to be paid on a specified date in the future.
• D)to exchange a specified quantity of goods on a specified date in the future at the current market price.
• E)to exchange goods on a specified date in the future at a price that is agreed upon today.

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Definitions:

Accrued Interest

Interest that has been incurred but not yet paid or received, often relevant in bond investments and loans.

Asked Price

The minimum price a seller is willing to accept for an asset or security.

Coupon Bond

A type of bond that provides periodic interest payments to its holder, based on the fixed interest rate (coupon rate) of the bond.

Current Yield

The interest or dividends received from a security divided by the current market value of the security, often used to describe bonds.