The Following Is Not a Point of Difference Between Futures

question 17

Multiple Choice

The following is not a point of difference between futures and forwards.

• A) The futures payoff depends on the spot price of the asset at contract maturity.
• B) Futures are traded on an exchange.
• C) Futures have standardized terms.
• D) Default risk in a futures contract is borne by the exchange.

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Definitions:

Disposable Income

The liquidity pool available for households to channel into saving and spending after income tax deductions.

Induced Consumption

The part of consumer spending that increases when disposable income rises and decreases when disposable income falls.

Disposable Income

The amount of money left for spending and saving after income taxes have been deducted.

Autonomous Consumption

The level of consumption that does not change with fluctuation in income; it is the consumption level when income is zero.