Which of the Following Is False Regarding Futures and Forward

question 27

Multiple Choice

Which of the following is false regarding futures and forward contracts?

• A) A futures contract is less likely to default since it is marked-to-market daily.
• B) A futures contract is more liquid than a forward contract.
• C) It is more difficult to reverse a forward contract.
• D) Futures contracts are more flexible as to terms and conditions.
• E) It is easier to find a counterparty for a futures contract.

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Definitions:

Creditor

A person or institution that lends money or extends credit to another party, expecting to be repaid in the future.

Shareholder

An individual or entity that owns shares in a corporation, making them a partial owner of the company.

Government-Owned Corporations

Businesses owned by the government that operate with commercial objectives while being subject to government policy.

Limited Liability

A legal structure where a person's financial responsibility is limited to a fixed amount, usually the value of their investment in a corporation or partnership.