As Time Draws Closer to Contract Expiration, Futures Contract Prices

question 42

Multiple Choice

As time draws closer to contract expiration, futures contract prices can be expected to:

• A) increase as the demand for delivery intensifies.
• B) decrease as speculators resolve the uncertainty of prices.
• C) move similarly to broad-based market indices, such as the S&P 500.
• D)converge upon the spot price.

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Definitions:

Primacy Effect

The tendency to remember and give more importance to information that is encountered first in a list or series, as opposed to information that appears later.

Promotion Focus

A motivational state where an individual is primarily oriented towards achieving positive outcomes and realizing ambitions.

Approach of Positive

A methodology or mindset that emphasizes focusing on positive aspects, strengths, and constructive outcomes in various situations.

Self-Esteem

An individual's subjective evaluation of their own worth, encompassing beliefs about oneself as well as emotional states such as triumph, despair, pride, and shame.