Which of the Following Statements Is True

question 14

Multiple Choice

Which of the following statements is true?

• A)Basis equals futures price minus spot price.
• B)Futures contracts are usually closed out at maturity although they are settled daily through marking to market,because the futures price is based on final delivery.
• C)While the bank bill contract is used for operations involving short-term interest rates,the 10-year Treasury bond contract can be used for both short-term and long-term interest rates.
• D)None of the given options.

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Definitions:

Maximize Profit

The process or strategy aimed at achieving the highest possible profit from business operations, often by increasing revenue, reducing costs, or both.

Profit-maximizing Quantity

The level of output at which a firm achieves its highest profit, where marginal cost equals marginal revenue.

Total Profit

The overall financial gain made by a business after subtracting all expenses from the total revenue.

Profit-maximizing Price

The price level at which a company can sell its product to achieve the maximum possible profit, taking into account demand and production costs.