- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 2. Forward Commitment and Contingent Claim Features and Instruments
- Subject 1. Forward Commitments
CFA Practice Question
A futures contract is ______.
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
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
Correct Answer: B
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? |