If a Trader Holding a Long Position in Corn Futures

question 9

Multiple Choice

If a trader holding a long position in corn futures fails to meet the obligations of a futures contract, the party that is hurt by the failure is

• A) the offsetting short trader.
• B) the corn farmer.
• C) the clearinghouse.
• D) the broker.
• E) the commodities dealer.

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Definitions:

Average Tax Rates

The ratio of the total amount of taxes paid to the total tax base (taxable income or spending), indicating the percentage of income that goes to taxes.

Unemployment Compensation

Financial payments made to individuals who have lost their job through no fault of their own, intended to provide a temporary source of income.

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases, disproportionately affecting those with lower incomes.

Social Security Tax

A payroll tax collected to fund the Social Security program, charged to both employers and employees.