How is a futures contract on the S&P 500 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 are settled in cash, meaning that the gains or losses from the contract are paid out in cash rather than physical delivery of stocks or other assets. This allows for more flexibility and efficiency in trading, as well as reducing the risk of logistical and delivery issues.

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