An Advantage of a Forward Contract Over a Futures Contract

question 21

Multiple Choice

An advantage of a forward contract over a futures contract is that:

• A) The forward contract can be used to hedge against future price volatility.
• B) The size of the forwards contract is not fixed.
• C) Forward contracts can be easily traded on an exchange.
• D) Parties to a forward contract can more easily change the agreed upon future price of the underlying asset.
• E) None as forward contracts are simply an OTC futures contract.

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Definitions:

Having Family Ties

The connections and relationships among family members that can influence social, economic, and business dealings.

Low-Context And Individualistic

Pertains to cultures where communication is explicit, relationships are less emphasized, and individual achievement and autonomy are highly valued.

High-Context And Collectivist

A descriptor for cultures or societies where communication relies heavily on the context and non-verbal cues, and where group needs are prioritized over individual ones.

Geocentric And Individualistic

A perspective that combines valuing global views without prioritizing any one culture and emphasizing the importance of individual rights and values.