Which Type of Countertrade Involves Parallel Contracts

question 52

Multiple Choice

Which type of countertrade involves parallel contracts?

• A)Clearing agreements
• B)Switch trading
• C)Counterpurchases
• D)Offset purchases

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Definitions:

Option Contract

A contract that gives the holder the right, but not the obligation, to buy or sell an asset at a predetermined price within a specific time period.

Option Contract

A contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

Basis Risk

The risk that the price of a hedge and the asset being hedged will not move in perfect correlation.