Which One of the Following Statements Is Correct

question 105

Multiple Choice

Which one of the following statements is correct?

• A) An option seller makes more profits than an option buyer.
• B) A futures seller makes more profits than a futures buyer.
• C) A futures buyer's profit will be equal to the futures seller's loss.
• D)Both the buyer and the seller of a futures contract earn a profit simultaneously.

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Definitions:

Perpetual Inventory System

An inventory management system where updates to inventory records are made in real-time following each sale or purchase transaction.

FIFO

An inventory valuation method that assumes the first items acquired are the first ones sold, standing for First-In, First-Out.

Last-in, First-out

An inventory valuation method where the most recently produced or purchased items are the first to be expensed, often used to manage costs and taxes.

Last-in, First-out Method

An inventory valuation method where the goods purchased last are considered sold first for cost of goods sold calculation.