Standardized Contracts That Give the Buyer the Right but Not

question 33

Multiple Choice

Standardized contracts that give the buyer the right but not the obligation to buy financial assets in the future at a price set today are which of the following?

• A)financial forward agreements
• B)financial option agreements
• C)financial futures agreements
• D)financial swaps

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Definitions:

GATT Agreement

The General Agreement on Tariffs and Trade; a legal agreement between many countries whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.

WTO

The World Trade Organization, an international body that deals with the rules of trade between nations, aiming to ensure that trade flows smoothly, predictably, and freely.

Trade Barriers

Restrictions imposed by a government on international trade, such as tariffs, quotas, and import bans, to protect domestic industries.

Negative Balance of Trade

A situation where a country's imports of goods and services exceed its exports, resulting in a trade deficit.