Futures Contracts Differ from Forward Contracts in That

question 62

Multiple Choice

Futures contracts differ from forward contracts in that

• A) they can be used by financial managers to reduce risk.
• B) they provide their holder with an opportunity to buy or sell an asset at some future time if the asset's value has changed in a manner favorable to the futures contract holder.
• C) they sustain a small change in value when there is a small change in the price of the underlying commodity.
• D) they are for standardized commodities in standardized quantities and have standardized expiration dates.

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Definitions:

Gross Sales

The total revenue generated from sales before any deductions are made for returns, discounts, or allowances.

Response Variable

The outcome variable on which comparisons are made, often dependent on the predictor or independent variables in a study.

Fuel Economy

A measure of how far a vehicle can travel on a given amount of fuel, often expressed in miles per gallon or liters per 100 kilometers.

Categorical Variable

A variable that can take on values that are names or labels, representing discrete categories or groups.