The S&P500 index futures contract is an example of a(n)______ delivery contract.The pork bellies contract is an example of a(n)______ delivery contract.
A) cash; cash
B) cash; actual
C) actual; cash
D) actual; actual

Question

Quizplus · Accepted Answer

The S&P500 index futures contract is settled in cash. This means that when the contract expires, there is no physical delivery of the underlying asset. Instead, the contract is settled by paying or receiving cash based on the difference between the contract price and the market price of the underlying asset. On the other hand, the pork bellies contract is settled by physical delivery of the underlying asset. This means that when the contract expires, the seller of the contract is obligated to deliver the specified quantity of pork bellies to the buyer at a specified location, and the buyer is obligated to accept and pay for the delivery. Therefore, the S&P500 index futures contract is an example of a cash delivery contract, while the pork bellies contract is an example of an actual delivery contract.

The S&P500 Index Futures Contract Is an Example of A(n)______