The type of contract which involves the exchange of assets that will occur in future at the price settled daily, is classified as _____________?
Correct answer: C. future contracts
- A. spot contract
- B. forward contract
- C. future contracts
- D. present contract
Explanation
A futures contract involves a standardized future exchange and is marked to market through daily settlement of gains and losses. A forward contract is privately negotiated and normally settled at maturity rather than daily.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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