Investing in a Futures Contract

question 72

Multiple Choice

Investing in a futures contract:

• A)guarantees a sale but not a sale price.
• B)can be profitable for both the buyer and the seller simultaneously.
• C)guarantees the buyer a profit on the contract.
• D)creates a gain for one party without causing a loss for the other party.
• E)can be offset by taking an opposing position.

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Definitions:

Fixed Overhead

Regular, ongoing expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Standard Costing

An accounting method that applies estimated costs to product costs for budgeting purposes and cost control.

Flexible Budget

A budget that adapts or changes based on the fluctuations in a business's activity or volume level.

Variable Overhead

Costs that fluctuate with production volume, such as utilities or materials used in production.