What Are the Characteristics of the Forward Market? Why Do

question 78

Essay

What are the characteristics of the forward market? Why do companies participate in the forward market? Provide an example to illustrate your answer.

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Definitions:

Operating Line of Credit

A flexible loan from a bank that provides a maximum loan balance that the borrower can access for its short-term capital needs.

Company's Liquidity

An indicator of a company's ability to meet its short-term financial obligations, ensuring it has enough cash or liquid assets.

Interest (Finance) Expenses

Costs incurred by an entity for borrowed funds; these expenses may include the cost of debt or loan interest payments.

Statement of Income

A financial report that shows a company's revenue and expenses over a specific period, revealing the net profit or loss.