Which of the Following Is a Reason Why the Default

question 40

Multiple Choice

Which of the following is a reason why the default risk of a futures contract is assumed to be less than that of a forward contract?

• A)Forward contracts are classified as exotic derivatives.
• B)Margin requirements on futures.
• C)More flexibility as the buyer can decide whether or not to exercise the contract at maturity.
• D)None of the listed options are correct.as the default risk of a futures contract is generally considered to be higher than that of a forward contract.

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Definitions:

Wages

Payments made to employees by employers in exchange for work performed, typically calculated on an hourly or piecework basis.

Trade Instruments

Financial products and contracts used in international and domestic trade to facilitate commercial transactions and manage risk.

Exemption

A legal provision relieving a person or entity from a general requirement, duty, or penalty.

Seize

To take possession of something, often by legal authority, because of a rule or law.