Contingent Credit Risk on Derivative Contracts Is More Serious for Futures

question 46

True/False

Contingent credit risk on derivative contracts is more serious for futures contracts than for forward contracts.

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Definitions:

Stock Selling

The process of disposing shares of a company to investors in exchange for capital, also referred to as stock trading when done frequently.

Dollar Amount

The value of an item, service, or amount expressed in terms of U.S. dollars.

Interest Earned

The income received from investing in financial instruments that pay interest, such as savings accounts, bonds, or certificates of deposit.

Discounted Price

A reduced price compared to the original selling price, often due to promotions, clearance, or the application of discounts.