A Futures Contract Is an Agreement to Buy a Commodity

question 63

True/False

A futures contract is an agreement to buy a commodity at a specific future date, at a price set today.

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Definitions:

Subordinated Debentures

A type of debt instrument that ranks below other debts in case of liquidation or bankruptcy.

Debentures

A type of debt instrument that is not secured by physical assets or collateral but is based on the issuer's creditworthiness and reputation.

Junk Bonds

High-yield bonds with a lower credit rating than investment-grade bonds, reflecting a higher risk of default.

Industrial-Development Bond

A government-issued bond to support the development of industrial projects, often tax-exempt for the buyer.