Delivery of stock index futures a. is never made. b. requires delivery of 1 share of each stock in the index. c. is made by a cash settlement based on the index value. d. is made by delivering 100 shares of each stock in the index. e. is made by delivering a value-weighted basket of stocks.

Question

Maleah

Business

9 March, 21:37

Delivery of stock index futures a. is never made. b. requires delivery of 1 share of each stock in the index. c. is made by a cash settlement based on the index value. d. is made by delivering 100 shares of each stock in the index. e. is made by delivering a value-weighted basket of stocks.

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Answers (1)

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Leonardo Davila · Answer 1

Answer: c. is made by a cash settlement based on the index value

Explanation:

Stock index futures are settled by cash sort of like index options.

This means that there is no delivery of the actual underlying asset at the end of the contract.

The cash / profit is determined by the starting and ending prices of the futures contract.