Which of the Following Statements Regarding Long-Term Supply Contracts Is

question 37

Multiple Choice

Which of the following statements regarding long-term supply contracts is false?

• A) The market value of the contract at any point in time may not be easy to determine, making it difficult to track gains and losses.
• B) Long-term supply contracts are designed to eliminate credit risk.
• C) Long-term supply contracts insulate the firms from commodity price risk.
• D) Long-term supply contracts are bilateral contracts negotiated by a buyer and a seller.

---

Definitions:

Quick Ratio

A liquidity ratio that measures a company’s ability to meet its short-term obligations with its most liquid assets, excluding inventory.

Current Ratio

A metric assessing a firm's capacity to meet its obligations due in less than a year by converting assets into liquid cash swiftly.

Decimal Place

A position of digit within a number after the decimal point, used to signify fractions of a whole.

Percentage Change

Percentage change measures the degree of change over time, calculated as the difference between two values divided by the original value, multiplied by 100.