An Undeliverable Futures Contract Refers to a Futures Contract in Which

question 60

Multiple Choice

An undeliverable futures contract refers to a futures contract in which:

• A)there is no physical settlement
• B)there is no mandatory cash settlement
• C)one of the parties is unable to deliver
• D)money has been lost due to a party having chosen an unfavourable hedging strategy

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Definitions:

Reverse Fault

A type of fault where the hanging wall moves up relative to the footwall due to compressional forces.

Strike-Slip Fault

A type of fault where two blocks of earth slide past each other horizontally.

Lateral Fault

A type of geological fault where the motion is primarily horizontal.

Horizontal Compression

A tectonic stress that squeezes rock and can lead to the folding or faulting of the earth's crust.