Which of the Following Is a (Are)key Difference(s)a Manager Should

question 75

Multiple Choice

Which of the following is a (are) key difference(s) a manager should note in choosing between forward and futures contracts?

• A) Exchange trading makes forward contracts more liquid.
• B) Futures contracts carry standardized terms,while forward contracts can be tailored to meet specific needs.
• C) Futures contracts have greater default risk than forward contracts.
• D) Forward contracts require initial margin deposits and daily marking to market,while futures do not.

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Definitions:

Parol Evidence Rule

A common law rule that states that oral evidence of an agreement made prior to or contemporaneously with a written agreement is inadmissible when the parties intend the written agreement to be the complete and final version of their agreement.

Parol

Relating to or given by word of mouth; not in writing or formalized in documents.

Parol Evidence Rule

A rule in contract law that prevents parties from presenting evidence of prior or contemporaneous agreements that would contradict the written terms of the contract.

Oral Contracts

Agreements made through spoken communication that are binding, albeit harder to prove than written contracts.