A Futures Contract ________

question 21

Multiple Choice

A futures contract ________.

• A)is a contract to be signed in the future by the buyer and the seller of a commodity
• B)is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contract
• C)is an agreement to buy or sell a specified amount of an asset at whatever the spot price happens to be on the expiration date of the contract
• D)gives the buyer the right, but not the obligation, to buy an asset at some time in the future

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Definitions:

Acquisition Target

A company or business that is considered a potential candidate for purchase by another company.

Terminal Value

The estimated value of a business or project beyond the forecast period when future cash flows can be assumed to grow at a steady rate.

Cash Flow Estimation

The process of forecasting the inflow and outflow of cash for a business, project, or investment over a specified period, crucial for budgeting and financial planning.

Constant Rate

A fixed rate at which something occurs, such as growth or decline, over a particular period of time.