The Seller of a Futures Contract

question 78

Multiple Choice

The seller of a futures contract

• A) has the option of canceling the contract the following day if the price is not acceptable to him/her.
• B) is legally bound to make delivery of the specified item on the specified day.
• C) receives the entire contract amount at the time the contract is made.
• D) must make delivery before receiving any monies on the contract.

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Definitions:

Semiannual Coupon

Interest payments made twice a year by a bond issuer to the bondholders.

Current Interest Rates

The interest rate present at the moment in the financial market, affecting loans and savings.

Market Price

represents the current price at which an asset or service can be bought or sold in a marketplace.

Bond's Yield

The annual return on a bond investment, calculated by dividing the annual interest payments by the bond's current market price.