One of the Biggest Differences Between a Futures Option and a Futures

question 58

Multiple Choice

One of the biggest differences between a futures option and a futures contract is that

• A) the option limits the loss exposure to the price of the option.
• B) the futures contract limits the loss exposure to the price of the contract.
• C) an option can be traded on the secondary market, whereas a futures contract cannot.
• D) a futures contract can be traded on the secondary market, whereas an option cannot.

---

Definitions:

Deductible IRA Contribution

A contribution to an Individual Retirement Account that can be subtracted from gross income for tax purposes.

Pension Plan

Pension Plan is a type of retirement plan where an employer contributes to a pool of funds set aside for employees' future benefit, distributed upon retirement.

Single Life Annuity Contract

An insurance policy that provides a fixed or variable payment to an annuitant at regular intervals for their lifetime.

Tax-free Amount

An amount or income received that is not subject to income tax by the taxpayer.