A futures contract _________ a zero sum game. A forward contract __________ a zero sum game.
A) is; is
B) is; is not
C) is not; is not
D) is not; is
E) Cannot be determined from the information given.

Question

Quizplus · Accepted Answer

A futures contract is a zero-sum game because for every winner there is a loser, meaning that the gains of the winner are exactly offset by the losses of the loser. Similarly, a forward contract is also a zero-sum game because the parties have locked in a price at the outset, so any gain by one party is an equal loss to the other.

A Futures Contract _________ a Zero Sum Game