As a Futures Contract Approaches the Delivery Month

question 22

Multiple Choice

As a futures contract approaches the delivery month,

• A) most contracts are delivered early.
• B) open interest rises.
• C) reversing transactions decrease.
• D) open interest declines.

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Definitions:

Accounts Payable

Money owed by a company to its suppliers or creditors for goods and services received but not yet paid for.

Indirect Method

A method used in cash flow statements to convert net income into net cash flow from operating activities by adjusting for non-cash transactions and changes in working capital.

Depreciation Expense

The allocated portion of the cost of a fixed asset, written off as an expense over its useful life to reflect its wear and tear or obsolescence.

Amortization Expense

The periodic allocation of the cost of an intangible asset over its useful life.