A Potential Disadvantage of Forward Contracts Versus Futures Contracts Is

question 22

Multiple Choice

A potential disadvantage of forward contracts versus futures contracts is:

• A)the extra liquidity required to cover the potential outflows that occur prior to delivery and caused by marking to market.
• B)the incentive for a particular party to default.
• C)that the buyers and sellers don't know each other and never meet.
• D)All of the above.
• E)Both A and C.

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Definitions:

Top-down Processes

Refers to cognitive processes that are guided by higher-level mental processes, such as prior knowledge, expectations, and attention, influencing the perception and interpretation of information.

Tropic Cascades

Ecological phenomena where predators in a food web indirectly affect the abundance or distribution of their prey's prey, through a chain of interactions.

Keystone Species

A pivotal species within an ecosystem that other species heavily rely on, whose absence would result in profound alterations to the ecosystem's composition.

Cryptic Coloration

Colors or markings that help some organisms hide from predators by blending into their physical surroundings. Compare with aposematic coloration.