Forward Contracts Do Not Require an Upfront Premium

question 40

True/False

Forward contracts do not require an upfront premium.

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Definitions:

Economic Profits

The extra income a business makes after accounting for all explicit and implicit costs, representing a return above the normal profit level.

Labor

The human effort, either physical or mental, that is used in the production of goods and services.

Capital

Financial assets or the financial value of assets, such as cash and goods, used to generate wealth through investment or production.

Marginal Product

The additional output resulting from a one-unit increase in the use of a variable input, holding all other inputs constant.