Which of the Following Is False About Profits from Futures

question 63

Multiple Choice

Which of the following is false about profits from futures contracts?I) The person with the long position gets to decide whether to exercise the futures contract and will only do so if there is a profit to be made.II) It is possible for both the holder of the long position and the holder of the short position to earn a profit.III) The clearinghouse makes most of the profit.IV) The amount that the holder of the long position gains must equal the amount that the holder of the short position loses.

• A) I only
• B) II only
• C) III only
• D) IV only
• E) I, II, and III

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Definitions:

Warehouse Receipts

Documents issued by warehouse operators certifying the possession and storage of specified goods.

Bills of Lading

Official documents issued by a carrier to acknowledge the receipt of cargo for shipment.

Accession

A method of acquiring property rights by adding value to personal property through labor or new materials.

Speakers

Devices designed to produce audio output from an electronic device.