Futures Contracts Are Similar to Forward Contracts in That They

question 79

Multiple Choice

Futures contracts are similar to forward contracts in that they both

• A) have volatile price movements and strong interest from buyers and sellers.
• B) give the holder the option to make a transaction in the future.
• C) have similar liquidity.
• D) have similar credit risk.
• E) trade on the same exchange.

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Definitions:

Appurtenance

A legal term referring to an accessory or adjunct that is attached to and passes with the principal property.

Ceiling Fans

Mechanical fans mounted on the ceiling of a room, used to circulate air for cooling or ventilation purposes.

Imposition

The act of establishing something by authority, such as a tax, duty, or penalty.

Gifts

Items or funds given voluntarily without compensation by one party to another, often as a gesture of goodwill or to mark a special occasion.