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
The Answer Is:
A
This question includes an explanation.
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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