Which of the Following Is a Reason Why the Default

question 40

Multiple Choice

Which of the following is a reason why the default risk of a futures contract is assumed to be less than that of a forward contract?

• A)Forward contracts are classified as exotic derivatives.
• B)Margin requirements on futures.
• C)More flexibility as the buyer can decide whether or not to exercise the contract at maturity.
• D)None of the listed options are correct.as the default risk of a futures contract is generally considered to be higher than that of a forward contract.

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Definitions:

Emotional Bonds

The deep connections formed between individuals, often characterized by feelings of affection, loyalty, and love.

Secondary Group

A large, impersonal social group whose relationships are formal and goal oriented; their interactions are usually temporary.

Activities

Actions or tasks that are carried out by individuals or groups, typically requiring effort and aimed at achieving a certain goal.

Divide and Conquer

A strategy of gaining and maintaining power by breaking up larger concentrations of power into pieces that individually have less power than the one implementing the strategy.