Futures Contracts Are Similar to Forward Contracts in That They

question 26

Multiple Choice

Futures contracts are similar to forward contracts in that they both

• A) Have volatile price movements and strong interest from buyers and sellers.
• B) Give the holder the option to make a transaction in the future.
• C) Have similar liquidity.
• D) Have similar credit risk.
• E) None of the above.

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Definitions:

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers for goods or services sold on credit.

Days

Units of time consisting of 24 hours, often used to specify timeframes or durations.

Financial Data

Numerical data detailing a company's financial status, operations, and liquidity, utilized for evaluation and decision-making purposes.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the company.