Which of the following statements regarding futures trading is incorrect ? A. If
ID: 2804026 • Letter: W
Question
Which of the following statements regarding futures trading is incorrect?
A. If you buy a certain futures contract at a certain price, at the delivery date you will have to pay that price and receive the underlying asset.
B. If you sell a certain futures contract at a certain price, at the delivery date you will have to deliver the underlying asset at that price (i.e., you receive the price).
C. Whether you buy or sell a futures contract, you can get out of the contractual obligation by reversing the original trade before the delivery date.
D. Typically, for a particular underlying asst the futures price and the spot price are the same.
Explanation / Answer
The correct answer is D
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The spot price and the future price is not same,
However as the maturity date of the future approaches the differences between future price and spot price reduces.
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