Which of the Following Is True Regarding a Futures Contract

question 18

Multiple Choice

Which of the following is true regarding a futures contract?

• A)Few contracts end in delivery of a commodity.
• B)Most contracts end in delivery of a commodity.
• C)All contracts end in delivery of a commodity.
• D)No contracts end in delivery of a commodity.

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Definitions:

Incremental Cash Flows

The additional operating cash flow that an organization receives from taking on a new project.

Opportunity Costs

The expense incurred by not choosing the second-best option available during decision-making.

Initial Cash Flow

The first influx or outflow of cash associated with an investment or project, marking the beginning of its cash flow timeline.

Sunk Costs

Expenses that have already been incurred and cannot be recovered, which should not influence future business decisions.