Final answer:
The correct multiple-choice answer is B, which describes a futures contract as an agreement where parties commit to buy or sell a specified asset at a predetermined price upon the contract's expiration.
Step-by-step explanation:
A futures contract is an important financial instrument used by businesses and investors to hedge against risks or to speculate on future prices of commodities or financial assets. The correct answer to the student's question is B: a futures contract is an agreement to buy or sell a specified amount of an asset at a predetermined price on the expiration date of the contract.
This means that both the buyer and seller are bound by the terms of the contract to execute the trade at the specified price, regardless of the market price at the time of contract expiration.
In contrast to futures contracts, options contracts, as described in choice D, provide the buyer with the right but not the obligation to buy or sell an asset in the future. Choice C, involving the spot price at the time of expiration, is not accurate for futures contracts since the price is predetermined. Choice A also does not correctly describe a futures contract as it does not need to be signed in the future but is agreed upon and becomes binding at the time of entering the contract.