A futures contract is
A)a nonnegotiable,nonmarketable instrument.
B)a security,like stocks and bonds.
C)a standardized transferable agreement providing for the deferred delivery of a specified traded quantity of a commodity.
D)not a legal contract,and therefore its terms can be changed .

Question

Quizplus · Accepted Answer

A futures contract is a standardized agreement between two parties to buy or sell a specified asset, commodity or financial instrument at a certain price on a future date. The contract specifies the quantity, quality and delivery date of the underlying asset. Therefore, C is the best choice as it closely describes what a futures contract is. A is incorrect because a futures contract is negotiable and marketable, B is incorrect because a futures contract is not a security, and D is incorrect because a futures contract is a legal contract and its terms cannot be changed unilaterally.

A Futures Contract Is