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:

Suspension System

A collection of components in vehicles that provides support, absorbs shocks, and helps maintain tire contact with the road.

Bailees

Individuals or entities that have been given temporary possession but not ownership of a property under a bailment agreement.

Liability

A legal responsibility or obligation, often involving financial compensation for damage or harm caused.

Prudently

Acting with or showing care and thought for the future, typically in the management of resources or decision-making processes.