You Deal Over the Phone with a Counterparty

question 535

Multiple Choice

You deal over the phone with a counterparty. The subsequent confirmation differs from the terms agreed verbally. What is the result?

• A) The confirmation takes precedence as it is a written contract.
• B) The matter will have to be submitted to arbitration in order to establish the mutual intent of the parties.
• C) It depends on local law.
• D) The verbal agreement is binding.

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Definitions:

Financial System

An intricate network of financial institutions, markets, instruments, and services facilitating the flow of funds and enabling the allocation of resources in an economy.

Scarce Resources

Resources that are limited in availability and can be used for the production of goods and services.

Savers

Individuals or entities that set aside a portion of their income for future use, often in interest-bearing accounts or investments.

Financial Markets

Markets where financial securities, such as stocks and bonds, are issued and traded among investors.