A futures contract ________.
A) is a contract to be signed in the future by the buyer and the seller of a commodity
B) is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contract
C) is an agreement to buy or sell a specified amount of an asset at whatever the spot price happens to be on the expiration date of the contract
D) gives the buyer the right, but not the obligation, to buy an asset some time in the future

Question

Quizplus · Accepted Answer

A futures contract is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contract. It is a standardized contract traded on an exchange, which means that both the buyer and the seller are bound by the terms of the contract. Unlike options contracts, futures contracts obligate both parties to fulfill the terms of the agreement, either by delivering the asset or paying the predetermined price.

A Futures Contract ________