The Long Position in a Futures Contract Is the Party

question 52

Multiple Choice

The long position in a futures contract is the party that will:

• A) benefit from decreases in the price of the underlying asset.
• B) agree to make delivery of a commodity or financial instrument at a future date.
• C) benefit from increases in the price of the underlying asset.
• D) accept the greater share of the risk.

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Definitions:

NSF Check

A check that has not been honored by the bank due to insufficient funds in the account of the issuer.

Journal Entries

A method used to enter an accounting transaction into the general journal, documenting the debit and credit effects on specific accounts.

Cash Sales

Sales transactions where payment is received from the buyer immediately at the time of the sale, typically in cash or equivalent.

Deposits In Transit

Funds that have been deposited by a company but have not yet been recorded by the bank.