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Basic Question 9 of 11

A futures contract is ______.

A. a swap that exchanges one series of payments for another
B. a sales contract traded on an organized exchange where the amount, maturity and price are set in advance
C. a contract that establishes a specific maturity date and amount, but not the specific price
D. a derivative that limits the effects of fluctuations beyond a predetermined range

User Contributed Comments 3

User Comment
BunnyBaby Nice! 10/12
Shaan23 got tricked....price is not standardized but still set in advance
ankurwa10 sales contract implies one party sells and the other buys. but why not D? Does future have unlimited downside as well as upside risk? isn't that the reason why I would buy a futures contract, to limit them?
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I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach

Andrea Schildbach

Learning Outcome Statements

define forward contracts, futures contracts, swaps, options (calls and puts), and credit derivatives and compare their basic characteristics

CFA® 2025 Level I Curriculum, Volume 5, Module 2.