What Is the Primary Difference Between a Swap Contract and a Forward

question 262

Multiple Choice

What is the primary difference between a swap contract and a forward contract?

• A) The underlying asset.
• B) The number of exchanges.
• C) Daily marking to the market.
• D) A swap is an option while a forward contract is an obligation.
• E) Payment on a swap is made at the time of the agreement while payment is made on the settlement date for a forward contract.

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Definitions:

Technologies

Encompasses the collection of techniques, skills, methods, and processes used in the production of goods or services or in the accomplishment of objectives, such as scientific investigation.

Comparative Advantage

The ability of an individual, company, or nation to produce a good or service at a lower opportunity cost than its competitors.

High-Opportunity Cost

Refers to the high value or benefit that is foregone from not choosing the next best alternative with available resources.

Low-Opportunity Cost

Describes a situation where choosing one option over another entails a minimal sacrifice of alternative opportunities or benefits.