Which One of the Following Is True Regarding Forward Contracts

question 35

Multiple Choice

Which one of the following is true regarding forward contracts?

• A) The upfront costs to enter a forward contract can be significant.
• B) If a buyer of a forward contract earns a $200 profit, then the seller will also profit by $200.
• C) The buyer wins when market prices are less than the forward price.
• D) The payoff profile for the buyer of a forward contract is an upward sloping linear function.
• E) If the seller of a forward contract earns a profit, then the buyer has neither a profit nor a loss.

Evaluate the implications of trade agreements and policies on domestic and international markets.

Comprehend the relationship between international trade and the production possibility curve.

Understand the concept of comparative advantage and its application in international trade.

Comprehend the implications of specialization and trade for global economies.

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Definitions:

Experience

The process of gaining knowledge or skill from doing, seeing, or feeling things, often interpreted through a personal lens.

Empirical

Pertaining to knowledge or information gained by observation, experience, or experiments rather than through theory or pure logic.

French Impressionists

French Impressionists were a group of 19th-century artists who sought to capture fleeting moments and the effects of light using bold colors and innovative brushwork.

Realists

Individuals who base their perception of reality on the physical world, accepting it as it truly is, often in contrast to idealists.