Which of the following statements are true? A) Futures contracts have less liquidity risk and credit risk than forward contracts. B) Futures contract prices are strongly linked to the prevailing level of the underlying spot index. C) Futures contract decrease in price, the further forward in time the delivery date is set. D) All of the above. E) None of the above.

Question

Quizplus · Accepted Answer

A) This statement is not true as futures contracts and forward contracts have similar liquidity risk and credit risk.
B) This statement is true as futures contract prices are based on the underlying spot index.
C) This statement is not true as the price of futures contracts may increase or decrease depending on market conditions and expectations. 
D) Not all statements are true, therefore this choice is not correct.
E) None of the statements are not true, so this choice is also not correct.

Which of the Following Statements Are true