On the Expiration Date of a Futures Contract,the Price of the Contract

question 16

Multiple Choice

On the expiration date of a futures contract,the price of the contract converges to the

• A)purchase price of the contract.
• B)average price over the life of the contract.
• C)price of the underlying asset.
• D)average of the purchase price and the price of the underlying asset.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the products sold by a company.

Finished Goods Inventory

The total value of goods that have completed the production process but have not yet been sold to customers.

Overapplied Overhead

A situation where the amount of overhead allocated to products or services exceeds the actual overhead incurred.

Beginning Balance

The starting balance in an account at the beginning of a new accounting period, carried over from the end of the previous period.