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:

Hyper-

A prefix meaning excessive or above normal, often used in medical terms to describe conditions involving overactivity.

Intra-

A prefix meaning "within" or "inside," used to denote a location or condition inside a specific boundary.

Aden

Often a prefix referring to glands or glandular related in the context of medical terminology.

Actin

A protein that forms the thin filaments in muscle cells and is involved in motion and structure in other cell types.