Which of the following statements is true?

Question

Quizplus · Accepted Answer

The buyer of a futures contract holds a long position, meaning they have agreed to buy an underlying asset at a specific price in the future. The seller holds the opposite position, a short position. Option A is incorrect as the buyer of a forward contract can hold either a long or short position depending on whether they are buying or selling the underlying asset. Option B is incorrect as the value of a futures contract can fluctuate, meaning the buyer can have either a winning or losing position. Option C is also incorrect for the same reason as option B.

Which of the Following Statements Is True