A Key Characteristic of Forward Contracts That Recommends Their Use

question 65

Multiple Choice

A key characteristic of forward contracts that recommends their use over futures contracts is:

• A) forwards are not traded on exchanges and marked-to-market.
• B) forward contracts allow flexibility with respect to contract period.
• C) forwards are not standardised instruments with regard to the amount of each contract.
• D) all of the given answers.

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Definitions:

Social Security Tax Rate

The rate at which income is taxed to fund the Social Security program, typically shared between employees and employers.

Medicare Tax Rate

The percentage of an individual's wages that is withheld or paid toward Medicare, a U.S. government health insurance program.

Net Pay

The amount of an employee's income after all deductions like taxes, insurance, and retirement contributions have been subtracted.

Social Security

A government program that provides financial assistance to people with inadequate or no income, such as the elderly, disabled, and survivors.