Which of the Following Is NOT a Difference Between a Currency

question 37

Multiple Choice

Which of the following is NOT a difference between a currency futures contract and a forward contract?

• A) The futures contract is marked to market daily, whereas the forward contract is only due to be settled at maturity.
• B) The counterparty to the futures participant is unknown with the clearinghouse stepping into each transaction, whereas the forward contract participants are in direct contact setting the forward specifications.
• C) A single sales commission covers both the purchase and sale of a futures contract, whereas there is no specific sales commission with a forward contract because banks earn a profit through the bid-ask spread.
• D) All of the above are true.

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Definitions:

Cycle Inventory

Cycle inventory refers to the portion of inventory that is consumed and replenished in regular cycles in a supply chain, correlating with order frequency.

Annual Inventory

encompasses the total quantity or value of inventory that a company holds over a year, reflecting both the turnover rate and the efficiency of inventory management.

Distribution Inventory

Stocks of goods and materials held at various points in a supply chain, intended for downstream distribution.

Physical Inventory

The process of counting and verifying all physical goods and materials in stock by a business.