Financial futures are:
A) a commitment between two parties to trade a financial instrument at a certain rate at a specified time in the future.
B) A call option on a standardized asset at a certain price at a specified time in the future.
C) A put option on a standardized asset at a certain price at a specified time in the future.
D) a commitment between two parties on the price of a standardized financial asset with the final settlement specified time in the future.
E) b. and c.

Question

Financial futures are:
A) a commitment between two parties to trade a financial instrument at a certain rate at a specified time in the future. 
B) A call option on a standardized asset at a certain price at a specified time in the future.
C) A put option on a standardized asset at a certain price at a specified time in the future.
D) a commitment between two parties on the price of a standardized financial asset with the final settlement specified time in the future.
E) b. and c.

Quizplus · Accepted Answer

Financial futures are a commitment between two parties on the price of a standardized financial asset with the final settlement specified time in the future. This means that the two parties agree on a set price for a financial instrument, such as a stock or bond, at a future date. The final settlement occurs on the specified date, and the buyer and seller must fulfill their obligations according to the terms of the futures contract. Options, on the other hand, give the holder the right, but not the obligation, to buy (call option) or sell (put option) a standardized asset at a specified price on a certain date in the future. Therefore, options are not the same as financial futures.

Financial Futures Are