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

question 32

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.