Both Forward Contracts and Futures Contracts Provide for the Receipt $\begin{array}{cc} \text { Subject to } & \text { Subject to } \\ \text { margin call } & \text { discounting } \\\end{array}$

question 52

Short Answer

Both forward contracts and futures contracts provide for the receipt or payment of a specific amount of an asset at a specific price with delivery at a specified future point in time.Which combination of characteristics is true for a futures contract? ?
$\begin{array}{cc} \text { Subject to } & \text { Subject to } \\ \text { margin call } & \text { discounting } \\\end{array}$
A) $\begin{array}{ll}&\text { No } &&&& \text { No } \\\end{array}$
B) $\begin{array}{ll}&\text { No } &&&& \text { Yes } \\\end{array}$
C) $\begin{array}{ll}&\text { Yes } &&&& \text { No } \\\end{array}$
D) $\begin{array}{ll}&\text {Yes } &&&& \text { Yes }\end{array}$

• A)\(\begin{array}{ll}
• &\text { No } &&&& \text { No } \\\end{array}\)
• B)\(\begin{array}{ll}&\text { No } &&&& \text { Yes } \\\end{array}\)
• C)\(\begin{array}{ll}&\text { Yes } &&&& \text { No } \\\end{array}\)
• D)\(\begin{array}{ll}&\text {Yes } &&&& \text { Yes }
• \end{array}\)

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Definitions:

Edgeworth Box

A diagram used in microeconomics to show the distribution of resources or the outcome of trade between two parties.

Utility Function

An economic tool that describes how consumers rank different bundles of goods according to the level of satisfaction or utility those bundles provide.

Endowed

Provided with a large amount of a particular resource or quality.

Contract Curve

In economics, it represents the set of optimal points of exchange between two parties, where no further mutual benefit can be achieved through trade.