Which of the following statements about index futures is false?
A) Index futures are cash-settled.
B) Index futures track the underlying index.
C) Index futures are rarely shorted because it is very difficult to borrow all the stocks in the index in the correct proportions in order to effect the short.
D) Index futures are marked-to-market daily.

Question

Quizplus · Accepted Answer

Index futures can be easily shorted as they do not involve actual ownership of stocks. Instead, they are contracts to buy or sell the underlying index at a specified price and date. Shorting index futures involves selling a contract to sell the index at a later date, with the expectation that the index will decline in value.

Which of the Following Statements About Index Futures Is False