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:

Myelin Sheath

The insulating layer around many nerve fibers, consisting of protein and fatty substances, which enables faster transmission of electrical impulses.

Axon

A long, slender projection of a neuron that conducts electrical impulses away from the neuron's cell body.

Dendrite

Dendrites are branched extensions of a neuron that receive signals from other neurons and transmit them towards the cell body.

Node of Ranvier

Gaps in the myelin sheath along the axon of neurons where action potentials are generated.