A Forward Contract

question 121

Multiple Choice

A forward contract

• A)has more credit risk than a futures contract.
• B)is more standardized than a futures contract.
• C)is marked to market more frequently than a futures contract.
• D)has a shorter time to delivery than a futures contract.
• E)is less risky than a futures contract.

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Definitions:

Marginal Revenue

The financial gain achieved through the sale of one more unit of a good or service.

Average Total Cost

The cost per unit of output, calculated by dividing the total cost of production by the total quantity of output.

Marginal Cost

The cost added by producing one additional unit of a product or service, crucial for making efficient production and pricing decisions.

Marginal Revenue

The supplementary earnings obtained through the sale of an additional product or service unit.