Which one of the following statements related to futures contracts is correct?
A)The buyer of the contract has a short position.
B)The buyer of the contract has the right to either accept delivery or cancel the contract.
C)Futures contracts can be cancelled by either the buyer or the seller with 10 days' notice to the other party.
D)Both the buyer and the seller of the contract are obligated to fulfill their duties as outlined in the futures contract.
E)The buyer of the contract must deliver the underlying asset on the settlement date.

Question

Quizplus · Accepted Answer

Futures contracts are binding agreements to buy or sell an underlying asset at a predetermined price on a future date. Both the buyer and the seller of the contract are obligated to fulfill their duties as outlined in the contract, which includes the delivery or receipt of the underlying asset and the payment of the agreed-upon price. The buyer has a long position, while the seller has a short position. Futures contracts cannot be cancelled unilaterally by either party, but they can be offset or closed out by taking an opposite position in the same contract.

Which One of the Following Statements Related to Futures Contracts