Which One of the Following Methods of Setting Prices Would

question 39

Multiple Choice

Which one of the following methods of setting prices would reduce the transactions exposure for both the buyer and seller of a swap contract?

• A)setting a permanent price at which a commodity will be traded
• B)setting the price at the minimum spot price during a given period of time
• C)setting the price equal to the spot price on the delivery date
• D)using the average market price over a given period of time
• E)setting the contract price equal to some percentage, less than 100 percent, of the market price on any given day

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Definitions:

Population

The entire group of individuals or instances about whom the data is collected for a statistical study.

Elements

Basic or essential components, substances, or constituents of a complex form.

Interest

The cost of using money over a period, expressed as a percentage rate.

Study

An organized investigation or analysis aimed at discovering new knowledge or understanding existing knowledge in a systematic way.