Question

What is the main characteristic of a futures contract?

a.

It pays based on the price movements of an underlying asset or index

b.

It provides protection against weather-sensitive earnings

c.

It allows for the transfer of risks between parties

d.

It pays a fixed amount upon maturity

Answer: (a).It pays based on the price movements of an underlying asset or index Explanation:A futures contract is a derivative that pays in relation to price movements of an underlying asset or level of an index.

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Q. What is the main characteristic of a futures contract?

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