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Which of the Below Statements Is TRUE

Question 2

Multiple Choice

Which of the below statements is TRUE?


A) In the case of a futures contract, the buyer of the contract realizes a dollar-for-dollar loss when the price of the futures contract increases.
B) The maximum profit that the writer (seller) of an option may realize is the option price; this is offset against substantial downside risk.
C) In the case of a futures contract, the buyer of the contract suffers a dollar-for-dollar loss when the price of the futures contract rises.
D) The risk/reward characteristics of a futures contract and an option contract are identical.

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