The Typical Sequence of Cash Flows in a Futures Contract

question 49

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:

Qualitative Variables

Variables that express qualitative attributes and differentiate by category, not in numerical terms.

Chi-Square Test

A nonparametric test used to determine if there is a significant association between two categorical variables.

Sampling Distribution

The probability distribution of a given random-sample-based statistic if you repeatedly sample from the same population.

Degrees of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution, influencing the shape and range of possible outcomes.