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:

Restaurant Market

The segment of the economy that includes establishments and services involved in preparing meals, snacks, and beverages for immediate consumption.

Many Firms

A market situation where there are a large number of sellers, offering a variety of products.

Profit-Maximizing Quantity

The point of production where a firm reaches its maximum profit potential.

Panel

A group of individuals or experts gathered to discuss, analyze, or make decisions on specific subjects.