Question

QUESTION 117

1. Which of the following regarding futures contracts is least accurate?

   		a. Futures contracts are less liquid than forward contracts.
   		b. Futures contracts are marked-to-market.
   		c. Futures contracts are traded on a regulated exchange.
   		d. Futures contracts allow more delivery options than forward contracts.

QUESTION 118

1. A long position in a futures contract expiring in November can be offset by:

   		a. Selling a future contract expiring in November.
   		b. Selling a future contract expiring anytime between September and December.
   		c. Holding the contract to expiration.
   		d. Buying a futures contract that expires anytime other than November.

Answer 1

Hello,

Future Contract- A Future contract is a contract of two or more parties to buy or sell a particular asset at a specified quantity at a predetermined price at a future date.

Answer no- 117
Correct Answer is option A.
Future contracts are more liquid than the forward contract because they are traded on regulated exchange.

Answer no - 118
Long Position can be set off by Short position (selling the position).
The Correct Answer is A
because it can be setoff by selling a position before the expiry of november.

I hope this clear your doubt.

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