Use the Following Statements to Answer This Question

question 22

Multiple Choice

Use the following statements to answer this question:
I.Forward contacts are more affected by credit risk than future contracts.
II.Clearinghouses improve the level of risk associated with futures transactions.

• A)I and II are correct
• B)I and II are incorrect
• C)I is correct and II is incorrect
• D)I is incorrect and II is correct

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Definitions:

International Trade

International trade involves the exchange of goods, services, and capital across international borders or territories, facilitating global economic integration.

Exchange Rates

The price of one currency in terms of another, influencing international trade and investment.

Government Stabilization

The efforts and policies implemented by a government to stabilize the economy, often through interventions in financial markets.

Exchange Rate Risk

The risk that the value of an investment will decrease due to changes in the relative values of different currencies.