Futures and Forward Contracts Are Both

question 110

Multiple Choice

Futures and forward contracts are both:

• A)standardised
• B)agreements to settle at a future date
• C)exchange-traded
• D)usually closed-out
• E)usually cash settled, rather than delivered.

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Definitions:

Diseconomies of Scale

The phenomenon where production cost per unit increases as the scale of output increases, usually due to factors like increased complexity and inefficiencies.

Long-run Average Total Cost

The per unit cost of production when all inputs, including capital, are variable, typically depicting economies and diseconomies of scale.

Marginal Cost

The additional cost resulting from the creation of one more unit of a product or service.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.