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:

Autocracy

Absolute power resides in the hands of a single person or party.

Pluralist Theory

Refers to a theory in political science and sociology which suggests that power in a society is distributed among multiple groups and that this multiplicity ensures that no single group achieves dominance.

Elite Theory

A theory suggesting that societies are divided between a small ruling elite that holds power and the masses who are controlled by them.

Voter Turnout

The percentage of eligible voters who cast a ballot in an election, used to measure political engagement and participation.