How is a futures contract on the S&P 500 index settled?
A)cash
B)shares of stock selected by the contract buyer
C)shares of stock selected by the contract seller
D)shares of stock equivalent to those in the index
E)delivery of a Treasury bill equal in value to the settlement amount

Question

Quizplus · Accepted Answer

Futures contracts on the S&P 500 index are settled in cash, meaning that the parties involved exchange the difference between the initial contract price and the final settlement price in cash. This allows for speculation on the movement of the index without actually requiring physical delivery of any stocks or assets.

How Is a Futures Contract on the S&P 500 Index