Futures Contracts Reduce Future Uncertainty

question 245

Multiple Choice

Futures contracts reduce future uncertainty. Which statement(s) show how this is achieved?
I. Futures contracts allow the parties involved to mitigate possible shortages in quantities of the good.
II. Futures contracts allow the parties involved to mitigate unexpected changes in price that could hurt earnings.
III. Futures contracts always allow the seller to receive a price that is higher than the market price for the product.

• A) I and II only
• B) I only
• C) I and III only
• D) I, II, and III

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Definitions:

Progressive Income-tax

A tax system where the tax rate increases as the taxable amount increases, typically imposing higher taxes on higher income earners.

Price Elasticity

A measure of how sensitive the demand or supply of a product is to changes in price, indicating how quantities demanded or supplied respond to price changes.

Excise Tax

A tax applied to specific goods, such as alcohol and tobacco, typically to discourage their consumption or raise government revenue.

CAM Treatment

Stands for Complementary and Alternative Medicine, encompassing a wide range of health care practices, products, and therapies not traditionally associated with conventional medicine.