What is the key distinction between 'spot price' and 'futures price'? Option: Spot price involves immediate settlement, while futures price entails deferred settlement, Spot price is determined by supply and demand, while futures price is set by the exchange, Spot price reflects the current market value of an asset, while futures price represents its anticipated value at a future date, Spot price applies to physical assets, while futures price pertains to financial instruments

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What is the key distinction between 'spot price' and 'futures price'?

Spot price involves immediate settlement, while futures price entails deferred settlement

Spot price is determined by supply and demand, while futures price is set by the exchange

Spot price reflects the current market value of an asset, while futures price represents its anticipated value at a future date

Spot price applies to physical assets, while futures price pertains to financial instruments

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What does the 'basis of spread' in futures trading refer to?

The total number of futures contracts available for trading.

The difference between the spot price and the futures price of an asset.

The difference between the buying and selling price of a futures contract.

The risk-free rate of return used in futures pricing calculations.

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What is the key factor considered in the Expectancy Model of futures pricing?

The risk-free rate of return

Historical price trends of the underlying asset

The expected future spot price of the underlying asset

The net carrying cost of the underlying asset

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What is the term used to describe the difference between the spot price and the futures price of an underlying asset?

Basis or Spread

Discount

Premium

Contango

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What is the relationship between futures pricing and the price of the underlying asset?

Futures pricing is unrelated to the asset's price.

Futures pricing generally follows the asset's price but can diverge due to factors like interest rates and dividends.

Futures pricing always moves in the opposite direction of the asset's price.

Futures pricing is always higher than the asset's price.

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What is the core premise of a futures contract?

"Buyers and sellers agree to get into a contract today for a pre-decided quantity, with the price determined at a future date."

"Buyers and sellers agree to get into a contract today at a pre-decided price and quantity, with the actual exchange of goods happening at a future date."

"Buyers and sellers agree to exchange goods at a future date at a price determined on that date."

"Buyers and sellers agree to exchange goods today at a pre-decided price and quantity."