An Advantage of Futures Contracts Over FRAs Is That

question 37

Multiple Choice

An advantage of futures contracts over FRAs is that:

• A)futures contracts are not standardised
• B)futures contracts have a secondary market
• C)futures contracts have a lower up-front cost
• D)futures contracts are always deliverable
• E)futures contracts are more likely to provide a 'perfect hedge'.

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Definitions:

Acquisition Differential

The difference between the purchase price of a company and the net fair value of its identifiable assets and liabilities.

Goodwill

An intangible asset arising from the acquisition of one entity by another, representing the excess of purchase price over the fair market value of identifiable net assets.

Goodwill Impairment

A decrease in the value of the goodwill asset when the fair value of a company's goodwill becomes less than its recorded cost on the balance sheet.

Public Order

Laws, regulations, or practices aimed at preserving peace and preventing behaviors that disrupt society's tranquility and safety.