A Forward Contract Hedge Is Very Similar to a Futures

question 38

Multiple Choice

A forward contract hedge is very similar to a futures contract hedge, except that ____ contracts are commonly used for ____ transactions.

• A) forward; small
• B) futures; large
• C) forward; large
• D) None of these are correct.

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Definitions:

Parent Company

A company that holds enough voting stock in another firm to control management and operations by influencing or electing its board of directors.

Consolidated Financial Statements

Financial reports that combine the accounts of a parent company and its subsidiaries into a single document.

Fair Value Method

An accounting approach used to measure assets and liabilities at estimates of their current value, rather than at historical cost or intrinsic value.

Outstanding Stock

Refers to the total shares of a company that are currently held by all its shareholders, including share blocks held by institutional investors and restricted shares held by insiders.