The buyer of a futures contract
A)assumes the short position.
B)has the obligation to deliver the underlying financial instrument at the specified date.
C)has the obligation to receive the underlying financial instrument at the specified future date.
D)may, at his or her option, deliver or receive the underlying financial instrument at the specified date.

Question

Quizplus · Accepted Answer

The buyer of a futures contract has the obligation to receive the underlying financial instrument at the specified future date. This is because the buyer of a futures contract is taking a long position and expecting the price of the underlying asset to increase, at which point they can sell the contract or receive the underlying asset. Option A is incorrect because assuming the short position is the responsibility of the seller. Option B is incorrect because the obligation to deliver the asset falls on the seller. Option D is incorrect because it is the seller's responsibility to deliver or receive the underlying asset at the specified date, not the buyer's.

The Buyer of a Futures Contract