Question

A futures contract A)is an agreement to buy or sell a specified amount of an asset at the spot price on the expiration date of the contract. B)is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contract. C)gives the buyer the right, but not the obligation, to buy an asset some time in the future. D)is a contract to be signed in the future by the buyer and the seller of the commodity. E)none of the above.

Answer 1

Answer:

B) Is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contract.

Explanation:

A futures contract is when the agents agree a price for a specific asset. This asset is then bought and delivered in the future at the agreed upon price. This is a legally binding contract and obligates the agents to honor their part of the contract.

Therefore, in the light of above definition only option B stands out as the right answer.

Hope that helps.