At the Time a Futures Contract Is Written

question 90

Multiple Choice

At the time a futures contract is written:

• A)the underlying asset is specifically identified.
• B)the buyer pays a good faith deposit to the seller.
• C)the current market price of the underlying asset becomes the contract price.
• D)the current market price of the underlying asset must be less than the agreed upon futures price.
• E)the buyer is granted the right, but not the obligation, to exercise the contract.

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Definitions:

Economic Theory

A set of principles and models that explain how economies operate and how economic agents interact, encompassing a wide range of topics like supply and demand, inflation, and economic growth.

Assumption

A basic premise or belief that is accepted as true without proof, often used as a starting point for further argument or analysis.

Simplify

To simplify means to make something less complicated, easier to understand, or clearer by reducing complexity.

Special Cases

Special Cases refer to unique or extraordinary scenarios in economics that require specific attention or deviate from the norm due to unusual circumstances or factors.