Which One of the Following Statements Is True Regarding Futures

question 13

Multiple Choice

Which one of the following statements is true regarding futures contracts?

• A)Futures prices are generally set equal to the spot price on the delivery date.
• B)Futures contracts generally grant the buyer the option to accept only a portion of the contract.
• C)Cost and convenience are the two key considerations when establishing the settlement procedures.
• D)The seller of a futures contract has the option to deliver cash in an amount equal to the contract value in lieu of the underlying asset.
• E)The buyer and seller of the contract negotiate the price on the maturity date.

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Definitions:

Pure Monopolist

A single supplier in a market that controls all the supply of a particular good or service, with no close substitutes available, allowing for the setting of prices.

Profit-Maximizing

The procedure through which a corporation decides on the price and the amount of production that yields the most profit.

Pure Monopolist

A market structure in which a single seller controls the entire supply of a good or service, and where the entry of new competitors is prevented or highly restricted.

Profit-Maximizing Price

The price level at which a company can achieve the highest possible profit, considering its cost structure and demand for its products.