By Taking the Short Position on a Futures Contract of $100,000

question 66

Multiple Choice

By taking the short position on a futures contract of $100,000 at a price of 96 you are agreeing to ________ a ________ face value security for ________.

• A)sell;$100,000;$96,000.
• B)sell;$96,000;$100,000.
• C)buy;$100,000;$96,000.
• D)buy;$96,000;$100,000.

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Definitions:

Binding Price Ceiling

A legally established maximum price for a good or service that is lower than the equilibrium price, leading to shortages.

Price Floor

A government or regulatory-imposed minimum price below which a good or service cannot legally be sold, intended to protect producers.

Binding Price Floor

A government-imposed price control that sets a minimum price for a good or service, which is above the equilibrium price, causing a surplus.

Excess Supply

A situation in a market where the quantity of a product offered for sale by producers exceeds the quantity demanded by consumers at a current price, leading to potential downward pressure on prices.