Investing in a Futures Contract

question 72

Multiple Choice

Investing in a futures contract:

• A)guarantees a sale but not a sale price.
• B)can be profitable for both the buyer and the seller simultaneously.
• C)guarantees the buyer a profit on the contract.
• D)creates a gain for one party without causing a loss for the other party.
• E)can be offset by taking an opposing position.

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Definitions:

Straight-Line Method

A method of calculating depreciation by distributing the cost evenly across an asset's useful life.

Expense Recognition

The principle that expenses are recognized when they contribute to the generation of revenue, not necessarily when the cash is paid.

Systematic Allocation

The process of methodically spreading costs or revenues over a specific period of time or among different departments or products.