A Forward Contract

question 30

Multiple Choice

A forward contract:

• A)has more credit risk than a futures contract
• B)is more standardised than a futures contract
• C)is marked to market more frequently than a futures contract
• D)has a shorter time to delivery than a futures contract
• E)is less risky than a futures contract.

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Definitions:

Properly Set

Correctly established or arranged according to specified guidelines or principles.

Expectancy Theory

A motivational theory that suggests an individual's behavior is determined by their expected outcomes or rewards, based on the belief that effort leads to performance and performance leads to rewards.

High Instrumentality

The belief that performance will lead directly to desirable outcomes, an essential concept in expectancy theory of motivation.

High Valence

A condition or characteristic that is highly valued or desired by individuals, often motivating actions or behaviors toward achieving a specific outcome.