Why Are Most Futures Contracts Not Settled Through Delivery of the Product

question 69

Multiple Choice

Why are most futures contracts not settled through delivery of the product?

• A) Most contracts are settled through the margin account.
• B) Most contracts expire with neither party having an obligation to the other party.
• C) Most participants cancel their futures contracts through purchase of an option contract.
• D)It is easier and cheaper to settle in cash or by offset.

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Definitions:

Close Relationships

Deeply connected personal associations with significant others, characterized by affection, trust, and mutual support.

Preliminary Treatment

Initial steps or procedures done to prepare for the main treatment, often involving assessment and planning.

Nonnegotiable Guidelines

Nonnegotiable guidelines are strict rules or principles that must be followed without exceptions.

Consensus

A general agreement reached by a group, where the members mutually consent to a decision.