A Potential Disadvantage of Forward Contracts Versus Futures Contracts Is

question 62

Multiple Choice

A potential disadvantage of forward contracts versus futures contracts is:

• A)The extra liquidity required to cover the potential outflows that occur prior to delivery
• And caused by marking to market.
• B)The incentive for a particular party to default.
• C)That the buyers and sellers don't know each other and never meet.
• D)That the delivery instrument doesn't exist to cover the default risk.
• E)Both A and C.

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