Unlike Options,a Futures Contract Binds the Buyer to Buy the Commodity

question 68

True/False

Unlike options,a futures contract binds the buyer to buy the commodity at a fixed price.

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Definitions:

Risk-Free Rate

This rate is considered the minimum return investors expect for any investment, since they would not take on additional risk without the prospect of higher returns, often pegged to government-issued securities.

Convergence Play

An investment strategy that exploits the price difference between two or more markets or securities with the expectation that their prices will eventually converge.

Statistical Arbitrage

A quantitative approach to trading that uses statistical models to identify price inefficiencies among securities for profit.

S&P 500 Future

A financial contract based on the future value of the S&P 500 stock market index.