8006 Exam Dumps | The vast majority of exchange traded futures contracts are:

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Exam I: Finance Theory Financial Instruments Financial Markets - 2015 Edition
PRMIA.8006.v2021-04-25.q101
Question 24

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Question 24/101

The vast majority of exchange traded futures contracts are:

A. closed by an offsetting trade prior to expiry

B. settled using physical settlements

C. cash settled upon expiry

D. settled by delivery

Correct Answer: A

Explanation
The vast majority of exchange traded futures contracts are closed out prior to expiry by the parties acquiring offsetting positions. Very few contracts are settled by delivery. Since P&L on futures contracts is settled daily,
'cash settlement' really does not mean much as only the previous day's P&L is due or receivable on any given day.

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