One Distinguishing Difference Between the Buyer of a Futures Contract

question 70

Multiple Choice

One distinguishing difference between the buyer of a futures contract and the buyer of an option contract is that the futures buyer:

• A) pays a much higher premium than option buyers.
• B) has an obligation to purchase, not a choice.
• C) can lose no more than the initial premium.
• D)has increased rather than reduced risk.

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Definitions:

Cognitive Activities

Mental tasks and processes involved in the acquisition, processing, and use of knowledge.

Positive Consequences

Outcomes or results that are perceived as beneficial, encouraging behaviors they follow.

Organizational Reward Systems

Are structured schemes to compensate, recognize, and motivate employees on a collective basis, aligning individual achievements with the organization's goals.

Reinforcement Theory

A theory that suggests behavior is influenced by its consequences, with rewards encouraging the behavior's recurrence.