What Is the Purpose of a Credit Forward Agreement

question 36

Multiple Choice

What is the purpose of a credit forward agreement?

• A)To allow property-casualty insurers to hedge the extreme losses that occur after major catastrophes.
• B)To adjust prices on outstanding futures each day to reflect current futures market conditions.
• C)To facilitate the future exchange of an asset for cash at a price that is determined daily.
• D)To hedge a cash asset on a direct dollar-for-dollar basis with a forward or futures contract.
• E)To hedge against an increase in the default risk of a loan.

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Definitions:

Separate Returns

Tax returns filed by married individuals choosing not to file a joint tax return with their spouse, often detailing their own income, deductions, and liabilities.

Multiple Support Agreement

An agreement where two or more individuals provide more than half of a person's support, but no single individual contributes over 50%, allowing them to take turns claiming the dependent on their taxes under certain conditions.

Forms 2120

A designation that may be an error or specific to a niche application; without context, it's unclear, treating as potential error so, NO.

Tax Return

The form filed with a tax authority that reports income, expenses, and other pertinent tax information. Taxes payable or refundable are also determined through this document.