Currency Futures Contracts Sold on an Exchange

question 148

Multiple Choice

Currency futures contracts sold on an exchange:

• A) contain a commitment to the owner, and are standardized.
• B) contain a commitment to the owner, and can be tailored to the desire of the owner.
• C) contain a right but not a commitment to the owner, and can be tailored to the desire of the owner.
• D) contain a right but not a commitment to the owner, and are standardized.

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Definitions:

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit from the market.

Pure Monopoly

A market structure characterized by a single seller controlling the entire market supply of a unique product, with no close substitutes.

Economic Profits

Profits exceeding the opportunity costs of all resources used by the firm, indicating an above-normal return.

Monopoly Rights

The exclusive power granted to a company or individual to produce, sell, or conduct business in a specific market without competition.