One Distinguishing Difference Between the Buyer of a Futures Contract

question 70

Multiple Choice

One distinguishing difference between the buyer of a futures contract and the buyer of an option contract is that the futures buyer:

• A) pays a much higher premium than option buyers.
• B) has an obligation to purchase, not a choice.
• C) can lose no more than the initial premium.
• D)has increased rather than reduced risk.

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Definitions:

Evidence-based

A decision-making process that involves integrating best available research evidence with practitioner expertise and client preferences.

Decision Cycle

The process through which choices are identified, considered, and acted upon in a cyclical manner.

Crowdsourcing

The practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people, especially from the online community.

Outsourcing

The business practice of hiring external parties to perform services or create goods that traditionally were performed in-house by the company's own employees and staff.