Certified Management Accountant Practice Exam 2025 - Free CMA Practice Questions and Study Guide

A futures contract is characterized as an agreement to buy or sell a specific asset at a predetermined price at a future date, and it typically involves an unknown counterparty. This reflects the nature of futures trading, where contracts are standardized and traded on exchanges, which means that when one enters into a futures contract, they do not enter into an agreement with a specific individual or entity, but rather with the market as a whole.

The fixed price aspect is crucial because it allows parties to hedge against price fluctuations; once the contract is entered into, the price is locked in regardless of how the market price moves before the contract's expiration date. This mechanism provides certainty for both parties involved in the transaction, allowing for planning and risk management.

The other options present characteristics that do not align with the essence of a futures contract. For instance, a fluctuating price implies uncertainty about the transaction's value, which contradicts the very purpose of entering a futures contract. A binding agreement with a known counterparty is more reflective of over-the-counter transactions rather than standardized futures contracts. Lastly, the notion of a contract that can be voided by either party does not align with the rigid structure of futures contracts, which obligate both parties to fulfill the terms of the agreement