The Counterparty Risk in Forward Contracts

question 33

Multiple Choice

The counterparty risk in forward contracts:

• A)means that most MNCs do not participate in the forward markets.
• B)restricts forward market participants to large firms with good credit ratings.
• C)dictates that only financial institutions can participate in the forward markets.
• D)the forward markets are very small and facilitate only very small transactions.

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Definitions:

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Excellent Execution

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