Which of the following is(are) correct statements about the buyer of a futures contract?
I. The contract buyer is short on the position.
II. The contract buyer will profit from the contract if the price of the underlying asset increases.
III. The buyer can liquidate the position with an offsetting transaction.
IV. The majority of the buyers actually take delivery of the item.
A) II only
B) I and II only
C) I and IV only
D) II and III only

Question

Quizplus · Accepted Answer

II. The buyer of a futures contract is long on the position, meaning they will profit if the price of the underlying asset increases. III. Buyers (and sellers) can indeed liquidate their positions through an offsetting transaction before the contract's delivery date. The statement about the majority of buyers taking delivery is incorrect; most futures contracts are settled before delivery.

Which of the Following Is(are) Correct Statements About the Buyer