Commodity Forward Contracts Differ from Financial Forwards in the Following

question 2

Multiple Choice

Commodity forward contracts differ from financial forwards in the following manner:

• A)The underlying asset in a commodity forward is an asset that may be used in production and that gets consumed in the process.
• B)Commodity forwards are always more costly than financial forwards when the spot assets have the same prices.
• C)Commodity forwards have physical delivery whereas financial forwards have cash delivery.
• D)Commodity forwards do not have inconvenience yields whereas financial forwards do.

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Definitions:

Convey Information

The process of communicating or transmitting knowledge, facts, or data from one person or entity to another.

Language

A system of communication used by a particular community or country, involving the use of words in a structured and conventional way.

Spoken Forms

Varieties or styles of speech or oral communication, as opposed to written forms.

Written Forms

Various types of documents or texts that are recorded in writing.