The Main Difference Between a Forward Contract and a Cash

question 12

Multiple Choice

The main difference between a forward contract and a cash transaction is:

• A)only the cash transaction creates an obligation to perform.
• B)a forward is performed at a later date while the cash transaction is performed immediately.
• C)only one involves a deliverable instrument.
• D)neither allows for hedging.
• E)None of the above.

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Definitions:

Improvement

The process of making something better or more effective through changes, upgrades, or enhancements.

Technology

The application of scientific knowledge for practical purposes, especially in industry and the development of innovations.

Shift

In economics, a change in the position of a demand or supply curve on a graph, indicating a change in the quantity demanded or supplied at every price.

Economic Growth

An increase in the production of goods and services over a specific period, often measured as the rate of increase in gross domestic product (GDP).