Which of the Following Is NOT True About Forward and Futures

question 5

Multiple Choice

Which of the following is NOT true about forward and futures contracts?

• A) Forward contracts are more liquid than futures contracts
• B) The futures contracts are traded on exchanges while forward contracts are traded in the over-the-counter market
• C) In theory forward prices and futures prices are equal when there is no uncertainty about future interest rates
• D) Taxes and transaction costs can lead to forward and futures prices being different

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Definitions:

Umbilical Cord

A flexible cord-like structure containing blood vessels that connects a fetus in the womb to its mother's placenta, providing oxygen and nutrients.

Yolk

The nutrient-rich central part of an egg that serves as food for the developing embryo in egg-laying animals.

Cephalocaudal Pattern

A principle of physical growth that states development progresses from the head (cephalo) towards the tail (caudal), meaning children typically gain control over the head, chest, and arm muscles before those of the legs.

Spinal Cord

A long, thin, tubular structure made up of nervous tissue, extending from the brainstem to the lower back, which transmits neural signals between the brain and the rest of the body.