Question

On the floor of a futures exchange one futures contract is traded where both the long and short parties are opening new positions. What is the resultant change in the open interest

Answer 1

Answer:

The open interest is decreased by one which means there will be one less short position and one less long position.

Explanation:

Future contracts are the legal agreement to sell or buy something at a decided future date at a predetermined price. These contracts trade only on exchanges. Futures contracts does not last longer than forward contracts. Future contracts are standardized contracts which means they are not tailor made. The financial assets are transacted in the futures contract with specific quantity and a set price.