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Assume That Speculators Purchased a Futures Contract at the Beginning

question 47

Multiple Choice

Assume that speculators purchased a futures contract at the beginning of the year. If the price of a security represented by the futures contract ____ over the year, then these speculators wouldlikely have purchased the futures contract for ____ than they can sell it for.


Definitions:

Specified Cash Flows

Designated or pre-determined amounts of cash inflow or outflow expected to occur on specific dates in the future.

Specified Intervals

Predetermined or agreed periods at which certain actions are taken or conditions are reviewed, often used in finance with payments or interest calculations.

Call Option

A financial agreement that grants the purchaser the option to acquire an asset at a predetermined price during a defined period, without being obligated to do so.

Obligation

A commitment or requirement to perform or refrain from performing some action in the future.

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