Which of the Following Statements Regarding Futures Contracts Is False

question 35

Multiple Choice

Which of the following statements regarding futures contracts is false?

• A) Both the buyer and the seller can get out of the contract at any time by selling it to a third party at the current market price.
• B) Futures prices are not prices that are paid today. Rather, they are prices agreed to today, to be paid in the future.
• C) Futures contracts are traded anonymously on an exchange at a publicly observed market price and are generally very illiquid.
• D) Traders are required to post collateral, called margin, when buying or selling commodities using futures contracts.

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Definitions:

Unit Product Cost

The total cost (including direct materials, direct labor, and overhead) divided by the number of units produced, representing the cost to produce a single unit.

Net Operating Income

The income generated from a company's principal operations, calculated after deducting all operational expenses but before interest and taxes.

Break-Even

The point at which total revenues equal total costs, resulting in no profit or loss.

Sales Dollars

Revenue generated from the sale of goods and services, expressed in monetary units.