Forward Contracts Are of Limited Usefulness to Financial Institutions Because

question 77

Multiple Choice

Forward contracts are of limited usefulness to financial institutions because

• A)of default risk.
• B)it is impossible to hedge risk.
• C)they are relatively inflexible.
• D)of interest-rate risk.

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Definitions:

Group Conformity

The phenomenon where individuals adjust their behaviors, attitudes, or beliefs to match those of the group to which they belong, often due to real or perceived pressure.

Group Size

The number of individuals forming a social group or gathering, which can influence the group's dynamics, interactions, and outcomes.

Specific Purpose

A distinct aim or objective for which something is used, created, or exists.

In-Group

A social group to which a person psychologically identifies as being a member, often characterized by a sense of loyalty and exclusivity.