In a Forward Contract One Party to the Contract Deals

question 24

Multiple Choice

In a forward contract one party to the contract deals with

• A) the futures exchange.
• B) the stock exchange.
• C) the counter-party of the forward contract.
• D) the opposite swap party.
• E) the hedger.

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Definitions:

Discounted Payback

The period of time it takes for an investment’s cash flows, discounted at a particular rate, to cover its initial cost.

Discounted Payback Rule

A capital budgeting technique that determines the amount of time required for discounted cash flows from a project to repay the initial investment.

Pre-Specified Period

A defined time frame agreed upon or determined before the start of a certain process or event.

Discounted Payback Period

The time it takes to break even from an investment based on the present value of its cash flows.