Which of the Following Statements Regarding Futures Contracts Is FALSE

question 23

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:

Nominalizations

The conversion of verbs into nouns, often used in legal and formal writing to create a sense of abstraction or authority.

Verbs

Words that describe actions, states, or occurrences in sentences.

Nouns

Words that name people, places, things, or ideas.

Marginal Cost Curve

A graphical representation showing how the marginal cost of production varies with the quantity of output produced.