Forward Contracts

question 54

Multiple Choice

Forward contracts

• A)are highly liquid.
• B)entail small information costs.
• C)provide little risk sharing.
• D)are subject to default risk.

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Definitions:

Input

Resources used in the production process to create goods or provide services.

Proportions

The relationship between parts and a whole, often expressed as a ratio or fraction.

Factor 1

An element or component that contributes to a particular result or situation; can be considered as a contributing variable in different contexts.

Profit

The financial gain obtained when the revenue from selling goods or services exceeds the costs involved in their production or provision.