Which Is Not a Problem of Forward Contracts

question 2

Multiple Choice

Which is not a problem of forward contracts?

• A)a lack of liquidity
• B)a lack of flexibility
• C)the difficulty of finding a counterparty
• D)default risk

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Definitions:

Date of Record

The specific date set by a corporation upon which the company determines the shareholders eligible to receive a dividend or distribution.

Income Tax Expense

The cost of income taxes a company must pay, reported in the income statement as part of its expenses.

Dividends

Funds disbursed by a company to its shareholders, frequently as an allocation of earnings.

Retained Earnings

The portion of a company's profit that is held back and not distributed to shareholders as dividends, often reinvested in the business.