The Presence of the Delivery Option in a Futures Contract

question 24

Multiple Choice

The presence of the delivery option in a futures contract means that

• A) A futures contract may be physically settled but not a forward contract.
• B) All else remaining the same, a futures contract will trade at a lower price than a forward.
• C) All else remaining the same, a futures contract will trade at a higher price than a forward.
• D) A futures contract mat be settled in cash or by delivery of the physical asset.

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