Which of the Following Statements Regarding Futures Contracts Is FALSE

question 28

Multiple Choice

Which of the following statements regarding futures contracts is FALSE?

• A)Traders are required to post collateral, called 'margin', when buying or selling commodities using futures contracts.
• B)Futures contracts are traded anonymously on an exchange at a publicly observed market price and are generally very illiquid.
• C)Futures prices are not prices that are paid today. Rather, they are prices agreed to today, to be paid in the future.
• D)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.

---

Definitions:

Capital Guidelines

Regulatory standards that determine the minimum amount of capital that banks and other financial institutions must hold, designed to ensure stability and manage risk.

Banking Regulators

Authorities or bodies that supervise and oversee the banking industry to ensure stability, consumer protection, and adherence to laws.

Noncomplying Banks

Banks that fail to adhere to specified regulations, standards, or laws set by banking regulators or supervisory authorities.

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell shares of stock at a set price on or before a given date.