With a futures contract:
A) payment is made when the contract is created.
B) no payment is made until the settlement date.
C) the short position agrees to purchase the underlying asset.
D) the risk is eliminated for both parties.

Question

Quizplus · Accepted Answer

In a futures contract, no payment is made until the settlement date. The buyer and seller agree to a price and delivery date, but payment is typically made at the end of the contract period. This allows both parties to take advantage of price fluctuations in the meantime.

With a Futures Contract