The Main Difference Between a Forward Contract and a Cash

question 7

Multiple Choice

The main difference between a forward contract and a cash transaction is:

• A) only the cash transaction creates an obligation to perform.
• B) a forward is performed at a later date while the cash transaction is performed immediately.
• C) only one involves a deliverable instrument.
• D) neither allows for hedging.
• E) None of these.

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Definitions:

Creativity

The capacity to generate innovative and useful ideas or solutions.

New Products

Items or services that have been recently introduced to the market, offering new features or benefits.

Administrative Processes

Refers to the procedures and operations that contribute to the running of an organization, focusing on efficiency and effectiveness of workflows and policies.

Agency Theory

A theory explaining the relationship between principals (such as shareholders) and agents (such as company executives), focusing on the conflicts that can arise due to differing interests and information asymmetry.