Jeff agrees to buy 40,000 pounds of frozen pork bellies for delivery one year from now; upon delivery he will pay $32,400. This transaction is called a:
A) prediction settlement.
B) timing indenture.
C) futures contract.
D) hog agreement.

Question

Quizplus · Accepted Answer

The transaction described is a futures contract, which is an agreement to buy or sell a specific commodity, such as pork bellies, at a predetermined price and time in the future. The buyer (Jeff) is agreeing to purchase 40,000 pounds of pork bellies at a specific price ($32,400) at a future date.

Jeff Agrees to Buy 40,000 Pounds of Frozen Pork Bellies