CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

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
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?
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