Which of the Following Statements Is True

question 12

Multiple Choice

Which of the following statements is true?

• A) In a forward contract the buyer and seller agree on a price at time 0 and the bonds are delivered by the seller to the buyer 'at that time'.
• B) In a forward contract the buyer and seller agree on a price at time 0 and the bonds are delivered by the seller at a future point in time, e.g. after three months.
• C) In a forward contract the buyer and seller enter into a contract at time 0, the contract is marked-to-market on a daily basis, and the buyer pays the forward price quoted at expiry.
• D) None of the listed options are correct.

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Definitions:

Linear Equation

An equation between two variables that produces a straight line when graphed.

Solve

To find an answer to a problem or the solution to an equation.

Equation

A mathematical statement that asserts the equality of two expressions, usually shown by the symbol "=".

Solve

The process of finding the value of variables that make a mathematical statement true.