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:

New Business Venture

A newly established business endeavour, typically characterized by innovation, entrepreneurship, and risk.

Limited Partner

An investor in a partnership who has limited liability to the extent of their investment in the partnership and does not participate in daily business operations.

Dissolve

The process of formally closing or ending a legal entity, such as a corporation or partnership, and distributing its assets.

Partnership

A legal form of business operation between two or more individuals who share management and profits or losses.