As the Time of Settlement Gets Closer

question 7

Multiple Choice

As the time of settlement gets closer:

• A)The price of the futures contract will diverge from the price of the underlying asset.
• B)The price of the futures contract will always be above the price of the underlying asset.
• C)The price of the underlying asset and the future's price will show no correlation at all.
• D)The price of the futures contract will move in lockstep with the price of the underlying asset.

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Definitions:

Real Gross Domestic Product

Real Gross Domestic Product is another term for Real GDP, indicating the value of all goods and services produced by an economy adjusted for inflation or deflation.

Inventories

The stockpiles or amounts of goods being held by a business to fulfil future sales or production needs.

Aggregate Expenditure Line

A graphical representation that shows the total spendings in an economy at various levels of national income, illustrating the relationship between overall spending and the output level at which the economy can be in equilibrium.

Income

Refers to the amount of money received over a specific period of time by an individual or group from various sources like wages, investments, or business operations.