Why Do Most Futures Contracts Require Mandatory Cash Settlement? What

question 101

Essay

Why do most futures contracts require mandatory cash settlement? What does this entail?

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Definitions:

Qualitative Independent Variable

A variable that categorizes or describes attributes or characteristics, typically non-numeric, influencing the dependent variable.

F-ratio

A statistical value used in the analysis of variance (ANOVA) to compare the variability among group means to the variability within groups.

Explanatory Variables

Variables in a statistical model that are used to explain variation in the outcome or response variable.

Regression Model

A statistical method used to model the relationship between a dependent variable and one or more independent variables.