Question

How does a buyer of a futures contract differ from a seller of a futures contract?

a.

The buyer promises to transfer the asset at a specified price, while the seller promises to pay the price.

b.

The buyer hopes for a decrease in the asset price, while the seller hopes for an increase.

c.

The buyer promises to pay the price at a specified time, while the seller promises to transfer the asset.

d.

The buyer and seller have identical roles and responsibilities.

Posted under IC 89 Management Accounting

Answer: (b).The buyer hopes for a decrease in the asset price, while the seller hopes for an increase. Explanation:The buyer of a futures contract hopes or expects that the asset price will increase, while the seller hopes or expects that it will decrease in the near future.

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