In the Case of a Futures Contract, Buyers Can Settle

question 22

Multiple Choice

In the case of a futures contract, buyers can settle a contract:

• A) only by taking delivery.
• B) only by arranging an offsetting contract.
• C) either by delivery or offset.
• D) by a combination of delivery and offset.

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Definitions:

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales, indicating the percentage change in operating income for a one percent change in sales.

Total Revenue

The total amount of income generated by the sale of goods or services related to the company's primary operations.

Sensitivity Analysis

Sensitivity Analysis is a financial modeling technique that examines how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Scenario Analysis

A technique used in finance to evaluate possible future events by considering alternative possible outcomes (scenarios).