With a Futures Contract

question 34

Multiple Choice

With a futures contract:

• A) payment is made when the contract is created.
• B) no payment is made until the settlement date.
• C) the short position agrees to purchase the underlying asset.
• D) the risk is eliminated for both parties.

---

Definitions:

Negotiable Instrument

A written document guaranteeing the payment of a specified amount of money, either on demand or at a set time.

Relative Permanence

The quality of a negotiable instrument that ensures its longevity.

Writing Requirement

The writing requirement refers to legal stipulations that certain types of agreements or contracts must be documented in written form to be legally valid.

Drawer

A drawer is a person or entity that issues or writes a check or draft, instructing a bank or similar institution to pay a specific amount of money to a designated party.