Question

30) An investor who goes short in a futures contract will __ any increase in value...

30) An investor who goes short in a futures contract will __ any increase in value of the underlying asset and will __ any decrease in value in the underlying asset.

Multiple Choice
receive; receive
receive; pay
pay; receive
pay; pay

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Answer #1

The answer to this question is c) Pay, Receive

This is because since you have sold the future contract, if the price increase in future, you have to deliver the underlying at a cheaper price to the long party hence its a loss then you have to pay the difference. If the price falls in future, you will deliver the good at a higher price then the market prive current prevailing hence receiving a profit

I hope this makes sense

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