The Seller of a Forward Contract

question 41

Multiple Choice

The seller of a forward contract:

• A) is obligated to make delivery and accept the forward price.
• B) has the option of making delivery and receiving the greater of the spot price or the contract price.
• C) has the option of either making delivery or accepting delivery.
• D) is obligated to take delivery and pays the lower of the spot market price or the contract price.
• E) is obligated to take delivery and pay the forward price.

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Definitions:

Validity

Indicates the degree to which a measurement, test, or study accurately reflects or assesses the specific concept it is intended to measure.

Credibility

The quality of being believable or worthy of trust.

Unsolicited Proposals

Proposals or offers made without a direct request, often aimed at pitching new ideas or suggesting improvements.

Solicited Proposals

Proposals submitted in response to a request from an organization or individual, often as part of a competitive bidding process.