Which of the Following Is NOT an Attribute of a Forward

question 41

Multiple Choice

Which of the following is NOT an attribute of a forward of futures contract?

• A) Because futures contracts are between anonymous parties, there is a risk of default as each party may not be in a position to assess the credit worthiness of the other party .
• B) Since a forward contract is only a customary agreement between non-anonymous parties, there is a risk that one party may default if future prices deviate materially from the contracted price.
• C) By alternatively using a future contract rather than a forward contract, the risk of default is eliminated.
• D) In the case of a forward contract where the contract is negotiated with a known party, a firm may be disclosing strategic information regarding its risk exposure.

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Definitions:

Choices

Options available to individuals or organizations from which a decision can be made.

Information Search

The stage in the buying process where consumers actively seek out information to fill a gap in their knowledge about products or services.

Consumer Purchase Decision

The process by which an individual decides what products or services to buy based on factors such as need, desire, and affordability.

External Environment

The outside factors and influences that affect an organization's decision-making process and performance, including economic, social, political, and technological factors.