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Answer: C
Open interest counts the number of outstanding futures contracts. Start with **0**. 1. **TA buys 1,000 from TB**, and both are new positions. - Open interest **increases by 1,000** → OI = **1,000** 2. **TC buys 300 from TA**, where TC opens a new long and TA closes 300. - One side opens and the other closes, so OI is **unchanged** → OI = **1,000** 3. **TD sells 225 to TB**, where TD opens a new short and TB closes 225. - Again, one side opens and the other closes, so OI is **unchanged** → OI = **1,000** 4. **TB delivers on 175 contracts to TA**. - Delivery closes existing long and short futures positions for both sides. - Open interest **decreases by 175** → OI = **825** So the correct answer is **825 contracts**.
Author: Manit Arora
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Q-21.12.3. Today, an exchange introduced a new futures contract. The open interest started at zero. Because it is a new contract, there were only the following four trades:
What is the open interest, after the above four trades, at the end of the day?
A
Zero
B
300 contracts
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