What Happens to the Price of a Futures Contract as Expiration

question 112

Multiple Choice

What happens to the price of a futures contract as expiration draws closer?

• A) It exceeds the spot price of the asset.
• B) It is exceeded by the spot price of the asset.
• C) It approaches the spot price of the asset.
• D) There is no relationship between futures price and spot price as the contract approaches expiration.

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Definitions:

Body Temperature

The measure of the body's warmth, typically averaged to about 37°C (98.6°F) in humans, but can vary based on various factors.

Interval Scale

A type of measurement scale that shows order and has equal intervals but lacks a true zero point, such as temperature in Celsius.

Measurement

The process or act of determining the size, length, or amount of something, typically using a specific device or system of notation.

Variable

An element, feature, or factor that is likely to vary or change.