Question: Question 2 (10 points) Explain what is meant by open interest. Why does the open interest usually decline during the month preceding the delivery month?

Question 2 (10 points) Explain what is meant by open interest. Why does the open interest usually decline during the month preceding the delivery month? On a particular day, there were 2000 trades in a particular futures contract. This means that there were 2000 buyers go long and 2000 sellers going short. Of the 2000 buyers, 1400 were closing out positions and 800 were entering into new positions. What is the impact of the day's trading on open interest

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