Forward Contracts Are Often Illiquid Because

question 3

Multiple Choice

Forward contracts are often illiquid because

• A)any capital gains on them are heavily taxed, making investors reluctant to sell them.
• B)government regulation has not provided for a secondary market in them.
• C)they generally contain terms specific to the particular buyer and seller.
• D)the brokerage fees involved in buying and selling them are very high.

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Definitions:

Control Chart

A graphical tool used in process control to display how a process changes over time, highlighting whether the process stays within predetermined control limits.

Sample Means

The arithmetic average of a set of values or observations, derived from a subset of a larger population.

Control Limits

The boundaries of acceptable variation in a process, used in statistical process control charts.

Chance Variation

The unpredictable fluctuations or differences that are observed in different samples from the same population, even under the same conditions.