What Happens to the Price of a Futures Contract as Expiration

question 70

Multiple Choice

What happens to the price of a futures contract as expiration draws closer?

• A) The futures price exceeds the spot price of the asset.
• B) The futures price is exceeded by the spot price of the asset.
• C) The futures price approaches the spot price of the asset.
• D) There is no relationship between the futures price and spot price as the contract approaches expiration.

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Definitions:

Resilience

The capacity to recover quickly from difficulties; toughness or adaptability in facing challenges.

Attitude

A settled way of thinking or feeling about someone or something, typically reflected in a person’s behavior.

Empathetic

The ability to understand and share the feelings of another person from their perspective.

Impulse Control

The capacity to manage and restrain sudden desires or urges to act, thereby demonstrating self-discipline and decision-making skills.