Which of the Following Statements About Index Futures Is False

question 19

Multiple Choice

Which of the following statements about index futures is false?

• A) Index futures are cash-settled.
• B) Index futures track the underlying index.
• C) Index futures are rarely shorted because it is very difficult to borrow all the stocks in the index in the correct proportions in order to effect the short.
• D) Index futures are marked-to-market daily.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums, providing stability to a company's expenses.

Variable Costs

Expenses that vary in direct proportion to changes in levels of production or sales activity, such as raw materials and direct labor costs.

Net Loss

The amount by which expenses exceed revenues.

Variable Costs

Expenses that vary in relation to the quantity of products or services a company generates.