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:

Justifiable Reliance

The principle that a party has acted upon another's representation with a reasonable belief that it was true, often relevant in cases of fraud or misrepresentation.

Nondisclosure

A failure to provide pertinent information about a projected contract.

Basic Assumption

A fundamental principle or belief that is accepted as true without proof.

Voidable

Refers to a legal distinction indicating that an agreement or transaction can be nullified or canceled by one of the parties involved.