Which of the Following Is NOT True About Forward and Futures

question 5

Multiple Choice

Which of the following is NOT true about forward and futures contracts?

• A) Forward contracts are more liquid than futures contracts
• B) The futures contracts are traded on exchanges while forward contracts are traded in the over-the-counter market
• C) In theory forward prices and futures prices are equal when there is no uncertainty about future interest rates
• D) Taxes and transaction costs can lead to forward and futures prices being different

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Definitions:

Excess Nitrogen

An overabundance of nitrogen in the environment, often resulting from agricultural fertilizers, which can lead to water pollution and ecosystem imbalances.

Fertilize Farmland

The addition of nutrients to agricultural soils to enhance plant growth and crop yields.

Exxon Valdez

An oil tanker whose 1989 spill off the coast of Alaska is considered one of the world's worst environmental disasters, causing extensive ecological damage.

Point Source

A single, identifiable source of pollution, such as a pipe or smokestack, that discharges pollutants into the environment.