Why Are Most Futures Contracts Not Settled Through Delivery of the Product

question 39

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 an offsetting futures transaction.

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