One of the Limitations of a Forward Contract Is That

question 47

Multiple Choice

One of the limitations of a forward contract is that:

• A) it is very difficult to frame and understand the agreement.
• B) the seller cannot be sure of the amount she will receive on settlement date.
• C) it is costly to find a willing counterparty.
• D) the prices in the forward market are highly volatile.

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Definitions:

Shorter

Relating to a length or duration that is less than average or than previously mentioned.

Seriation

A cognitive ability that allows individuals to arrange objects in accordance with a certain criterion, such as size or color.

Civil War

An internal conflict within a country, fought between differing factions, regions, or groups that belong to the same nation, often resulting in significant political, social, and economic changes.

Timeline

A graphical representation of a chronological sequence of events, typically used to visualize historical events, project milestones, or life events.