Futures Contracts Differ from Forward Contracts in That

question 55

Multiple Choice

Futures contracts differ from forward contracts in that

• A)future contracts ensures you will receive a certain amount of foreign currency at a specified future date.
• B)future contracts bind you into your end of the deal.
• C)future contracts allow you to sell your contract on an organized futures exchange.
• D)future contracts are a disadvantage if your views about the future spot exchange rate are to change.
• E)futures contracts don't allow you to realize a profit of a loss right away.

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Definitions:

Sarbanes-Oxley Act

A U.S. law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures.

Public Company Accounting Oversight Board

A nonprofit corporation established by Congress to oversee the audits of public companies in order to protect the interests of investors.

Enron

A former American energy company that went bankrupt in 2001 due to one of the largest accounting frauds in history.

WorldCom

Once a major telecommunications company that became infamous for its involvement in one of the largest accounting fraud scandals in history.