Which of the following statements about futures contracts is correct?
A) Most futures contracts are held to maturity.
B) Future contract holders will either buy or sell an opposite contract on or before expiry date to close-out the contract.
C) The majority of commodity futures are held to maturity.
D) Financial futures contracts are delivered at maturity whereas all commodity futures are closed-out.

Question

Quizplus · Accepted Answer

Futures contracts are typically used for hedging or speculative purposes and are not usually held to maturity. Instead, contract holders will buy or sell an opposite contract on or before the expiry date to close-out their position. This can either result in a profit or a loss depending on the market price at the time of closing out the contract.

Which of the Following Statements About Futures Contracts Is Correct