Forward Contracts Are Similar to Normal Transactions Between Buyers and Sellers

question 28

Multiple Choice

Forward contracts are similar to normal transactions between buyers and sellers with one exception.Which of the following statements best describes it?

• A)The timing of payment is different.
• B)The timing of ownership transfer is different.
• C)The timing of price derivation is different.
• D)Both A and B

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Definitions:

Long-run

A period in economics where all factors of production can be varied, and there are no fixed inputs, allowing full adjustment to changes.

Tripling Output

The act of increasing the production or output of goods and services threefold, signifying significant growth or scaling up of operations.

Economies of Scale

Cost advantages companies experience when production becomes efficient, as the cost per unit of output decreases with increasing scale.