Which of the Following Statements Is an Example of a Futures

question 130

Multiple Choice

Which of the following statements is an example of a futures market transaction?

• A) An investor purchases 100 shares of IBM hoping to sell it in two years for a profit.
• B) A company purchases an option to buy 1000 barrels of oil anytime between now and the end of the year.
• C) A company agrees to purchase 1000 barrels of oil for delivery in six months at a price of $70 per barrel.
• D) An executive has a portion of his current year salary deferred until he retires.

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Definitions:

Unilateral Mistake

A legal term describing a situation where only one party to a contract is mistaken about a basic assumption on which the contract is based.

Innocent Misrepresentation

A false statement made without knowledge of its falsity, not intended to deceive, which can lead to a contract being voided if relied upon by the other party.

Rescission

The legal remedy of canceling, terminating, or annulling a contract and restoring the parties to their original positions as if the contract had never been made.

Compensatory Damages

Financial compensation awarded to a plaintiff to cover losses or injuries that have been directly caused by the actions of the defendant.