An investor establishes a long position in a futures contract now (time 0)and holds the position until maturity (Time T).The sum of all daily settlements will be __________. A) F₀ - F_T B) F₀ - S₀ C) F_T - F₀ D) F_T - S₀

Question

Quizplus · Accepted Answer

The sum of all daily settlements for an investor with a long position in a futures contract can be calculated as the difference between the final settlement price and the initial settlement price, multiplied by the size of the contract. The final settlement price is F₀ and the initial settlement price is F_T, therefore the sum of all daily settlements would be F₀ - F_T. This is option C. The other options have irrelevant or incorrect components.

An Investor Establishes a Long Position in a Futures Contract