Which of the Following Statements About Index Futures Is False

question 14

Multiple Choice

Which of the following statements about index futures is false?

• A)Index futures are cash-settled.
• B)Index futures track the underlying index.
• C)Index futures are rarely shorted because it is very difficult to borrow all the stocks in the index in the correct proportions in order to effect the short.
• D)Index futures are marked-to-market daily.

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Definitions:

Newspaper Dispensing

A method or machine used for distributing newspapers to consumers, often requiring payment for each paper dispensed.

Diminishing Marginal Utility

The economic principle stating that as a person increases consumption of a product, there is a decline in the additional satisfaction or utility that person derives from consuming one more unit of the product.

Increasing Opportunity Costs

The principle that the cost of forgoing the next best alternative increases as one allocates more resources to a certain activity.

Value Losses

Decreases in the worth or market value of an asset over time.