Futures Contracts Are Said to Exhibit the Property of Convergence

question 54

Multiple Choice

Futures contracts are said to exhibit the property of convergence because ________.

• A) the profits from long positions and short positions must ultimately be equal
• B) the profits from long positions and short positions must ultimately net to zero
• C) price discrepancies would open arbitrage opportunities for investors who spot them
• D) the futures price and spot price of any asset must ultimately net to zero

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Definitions:

Rain Forests

Tropical forests characterized by high rainfall, dense canopy, and significant biodiversity.

Commercial Logging

The practice of cutting down trees and preparing timber for market use, often involving large-scale operations.

Hydroelectric Power

Power produced by the movement of water, specifically the generation of electrical energy.

Sand Dunes

Mounds or ridges of sand formed by the wind or sometimes by water flow, common in deserts and on beaches.