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Explain How the Use of Forward and Future Contracts Creates

question 19

Essay

Explain how the use of forward and future contracts creates contingent credit risk for an FI.


Definitions:

Pacinian Corpuscles

Sensory receptors found deep in the skin and other tissues that detect pressure and vibration.

Pressure

The force exerted by an object against a surface or the stress within substances influenced by external or internal forces.

Cerebellum

A region of the brain that plays an important role in motor control, coordination, and sensory integration.

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