When the Seller of a Futures Contract Is Granted a Choice

question 80

Multiple Choice

When the seller of a futures contract is granted a choice among various assets to deliver, the seller is said to have which one of the following options?

• A)right-to-choose option
• B)spot or futures option
• C)cheapest-to-deliver option
• D)mark-to-market option
• E)flexible delivery option

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Definitions:

Downward Sloping Demand

A fundamental principle in economics that suggests demand for a product decreases as the price increases, illustrated by a demand curve that slopes downwards from left to right.

Homogeneous Product

A Homogeneous Product is one that is seen as identical or very similar in nature, quality, and performance, regardless of the producer.

Excess Capacity

A situation where a company produces less than the maximum amount it can produce due to lower demand.

Equilibrium

A state where supply equals demand in a market, resulting in an optimal distribution of goods and services.