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.

---

Definitions:

Full Faith And Credit Clause

The clause of the U.S. Constitution (Article IV, Section 1) mandating that each state must recognize, respect, and enforce the public records, legislative acts, and judicial decisions of the other states.

Constitution

The Constitution is the foundational legal document delineating the principles, functions, and organization of a government and its relationship with the governed.

Expressed Constitutional Grant

Specific powers explicitly outlined in a constitution that are granted to a particular branch of government or official.

Federal Legislation

Laws enacted by the national government of a country, applicable throughout the country and superseding state laws in areas of federal authority.