Which of the Following Is NOT an Advantage of Using

question 57

Multiple Choice

Which of the following is NOT an advantage of using futures contracts to hedge an exposure compared to using forward contracts to hedge the same exposure?

• A)Futures hedges are easier to unwind.
• B)Futures have very low transaction costs.
• C)Futures offer greater flexibility in terms of contract features.
• D)Futures generally have more liquid markets.
• E)Futures generally offer greater efficiency.

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Definitions:

Phobic Disorder

A psychiatric condition characterized by an excessive and irrational fear of a specific object, situation, or activity.

Generalized Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry about a number of different things, significantly impacting daily functioning.

Delusions

Fixed false beliefs that are resistant to reason or confrontation with actual facts, often observed in psychiatric conditions.

Trembling

Involuntary, rhythmic muscle contractions leading to shaking movements in one or more parts of the body, often due to emotional states or medical conditions.