A Forward Contract on Wheat

question 251

Multiple Choice

A forward contract on wheat:

• A) Obligates the buyer to purchase a stated quantity of wheat at a specified price on a specified date.
• B) Obligates the seller to pay the buyer the difference between the market price and the forward price on the settlement date.
• C) Requires the buyer to mark-to-market on a daily basis.
• D) Requires both the buyer and the seller to resettle on a daily basis.
• E) Obligates the seller to deliver to the buyer the stated quantity of wheat on the day of the buyer's choosing up to and including the expiration day.

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