How Is the Cost of a Delivery Option Paid

question 44

Multiple Choice

How is the cost of a delivery option paid?

• A)the long pays the short with a cash settlement
• B)the short pays the long with a cash settlement
• C)a higher closing futures price
• D)a lower closing futures price
• E)none of the above

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Definitions:

Accounts Payable

The amount owed by a business to its suppliers or vendors for goods and services purchased on credit.

Accrual Basis

An accounting method that records income and expenses when they are earned or incurred, regardless of when cash is exchanged.

Expenses

Costs incurred by a business or individual in the course of generating revenue, including operational costs and overheads.

Dividends Payable

A liability account on a company's balance sheet representing the amount of declared dividends that have not yet been paid out to shareholders.