Which of the following statements is/are true about futures contracts?
I.The buyer of the contract must take delivery of the underlying commodity.
II.To reverse a position, the buyer of a contract must sell an identical contract which is recognized as offsetting the other one.
A)Only statement I is correct
B)Only statement II is correct
C)Both statements I and II are correct
D)Neither statement I nor II is correct

Question

Quizplus · Accepted Answer

Statement I is not always true because some futures contracts are cash settled and do not require physical delivery. However, statement II is true as a futures contract can be offset by selling an identical contract, which effectively cancels out the original position.

Which of the Following Statements Is/are True About Futures Contracts