Futures Differ from Forwards Because They Are

question 14

Multiple Choice

Futures differ from forwards because they are

• A) used to hedge portfolios.
• B) used to hedge individual securities.
• C) used in both financial and foreign exchange markets.
• D) standardized contracts.

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Definitions:

Fixed Cost

Fixed costs are business expenses that remain constant regardless of the quantity of goods or services produced, such as rent or salaries.

Total Cost

The sum of fixed and variable costs incurred by a firm in producing and distributing a specified level of output.

Marginal Cost

The expenditure involved in fabricating one more unit of a product or service.

Average Total Cost

Average total cost is the total cost of production divided by the quantity of output produced, indicating the cost on a per-unit basis.