Which of the Following Is NOT a Major Problem with Forward

question 28

Multiple Choice

Which of the following is NOT a major problem with forward contracts?

• A) It is often costly/difficult to find a willing counterparty.
• B) The market for forward contracts is illiquid as they are not easily sold to other parties.
• C) The market is highly regulated.
• D) One party usually has an incentive to break the agreement.

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Definitions:

Situation

A set of circumstances or a state of affairs at a particular time and place.

Fundamental Principle

A basic, essential rule or concept that serves as the foundation for a system of belief, behavior, or reasoning.

Aristotle

An ancient Greek philosopher and scientist, one of the greatest intellectual figures of Western history, known for his works on ethics, politics, logic, and science.

Consequentialists

Ethical theorists who believe that the morality of an action is determined by its outcomes or consequences, rather than by the action itself or any set of rules.