Which of the Following Statements Is True

question 13

Multiple Choice

Which of the following statements is true?

• A)The advantage of using forwards for creating a synthetic fixed rate position is that there are no cash flows until the contract matures.
• B)The advantage of using futures for creating a synthetic fixed rate position is that futures contracts are standardised.
• C)The advantage of using forwards for creating a synthetic fixed rate position is that futures contracts are standardised.
• D)The advantage of using futures for creating a synthetic fixed rate position is that there are no cash flows until the contract matures.

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Definitions:

Constant

A fixed value that does not change in a particular context or mathematical equation.

M-Squared Measure

A performance metric that measures the return of a portfolio, adjusted for risk, compared to a benchmark.

Risk-Adjusted Return

A measure of an investment's return that accounts for the level of risk taken, allowing for the comparison of investments with different risk levels.

Mutual Funds

Shareholder-funded investment initiatives that engage in diversified portfolios and are managed by experts.