An investor who goes long in a futures contract will ________ any increase in value of the underlying asset and will ________ any decrease in value in the underlying asset.
A) pay; pay
B) pay; receive
C) receive; pay
D) receive; receive

Question

Quizplus · Accepted Answer

When an investor goes long in a futures contract, they are essentially buying that asset at a predetermined price. If the value of the underlying asset increases, the investor will receive the profit. Alternatively, if the value of the underlying asset decreases, the investor will have to pay the difference. Therefore, the investor will receive any increase in value of the underlying asset and will pay any decrease in value in the underlying asset.

An Investor Who Goes Long in a Futures Contract Will