Like a Tango, It Takes Two to Make a Futures

question 268

Multiple Choice

Like a tango, it takes two to make a futures contract. But unlike the tango, the participants in a futures contract:

• A) disagree about the future.
• B) have different opportunity costs.
• C) face different incentives about predicting the future.
• D) dislike each other's company.

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Definitions:

Net Operating Income

An indicator of a firm's earnings generated from its principal business activities, not accounting for interest and tax deductions.

Variable Costing

An accounting method that includes only variable production costs in product costs, excluding fixed overhead.

Absorption Costing

An accounting strategy that considers every manufacturing expense, including direct materials, direct labor, and overhead costs (both variable and fixed), in determining a product’s cost.

Income Statement

A financial statement that shows a company's revenue, expenses, and profits over a specific period, usually a fiscal quarter or year.