Forward Contracts Are of Limited Usefulness to Financial Institutions Because

question 77

Multiple Choice

Forward contracts are of limited usefulness to financial institutions because

• A)of default risk.
• B)it is impossible to hedge risk.
• C)they are relatively inflexible.
• D)of interest-rate risk.

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Definitions:

Assembly Department

A division within a manufacturing facility where components are put together to form a final product.

Materials

Materials refer to the supplies and components used in the production of goods or services, a broader category that includes raw materials and any other consumables in the manufacturing process.

Conversion Costs

Combined costs of direct labor and manufacturing overheads, representing expenses required to convert raw materials into finished goods.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods in process costing environments, treating them as if they were whole units.