Question

Which term represents the amount of asset that must be delivered under one futures contract?

• A. Basis
• B. Contract cycle
• C. Contract size
• D. Expiry date

Hint:

Contract size defines how much of the underlying asset is represented in one futures contract.

Answer 1

The Correct Option is C

In futures trading, the contract size denotes the predetermined quantity of the underlying asset to be delivered or settled for a single futures contract. For instance, a gold futures contract might stipulate a contract size of 1 kilogram, signifying that one contract corresponds to 1 kg of gold. Explanation of Other Options: (A) Basis: The disparity between an asset's spot price and its futures price. (B) Contract cycle: The duration or months within which futures contracts reach expiration. (D) Expiry date: The specific date on which a futures contract becomes void. Consequently, option (C) accurately specifies the quantity of an asset per futures contract.