Since Forward Contracts Are Negotiated Over-The-Counter and the Parties Have

question 39

True/False

Since forward contracts are negotiated over-the-counter and the parties have maximum flexibility when setting the terms and conditions, credit and counterparty risk does not exist.

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Definitions:

Market Economy

An economic system in which supply and demand from consumers and businesses guide the production, distribution, and pricing of goods and services.

Economic Pie

A metaphor for the total amount of wealth or resources available in an economy.

Central Distributing Agency

An organization or entity responsible for the centralized procurement and distribution of goods or services.

Capital Market

A financial market in which long-term debt or equity-backed securities are bought and sold.