The Typical Sequence of Cash Flows in a Futures Contract

question 82

Multiple Choice

The typical sequence of cash flows in a futures contract is:

• A)Purchase price plus a margin account up front, differences are settled at expiration
• B)Margin account up front, differences are posted daily and settled in cash if margin drops too low
• C)Margin account up front, all differences settled at expiration
• D)All funds are paid at expiration of the contract

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Definitions:

Dollar Amounts

Quantitative measures expressed in units of currency, commonly used to refer to sums of money in financial transactions.

Exact Dollar

A term that specifies a precise amount of money, down to the last penny, without rounding or estimation.

Scenario Manager

A function within spreadsheet software that allows users to create and analyze multiple what-if versions of a dataset.

Forecast Sheet

A feature in spreadsheet software that allows for the prediction of future values based on historical data, using statistical methods.