Which of the Following Statements Is True Regarding Forward Contracts,futures

question 12

Multiple Choice

Which of the following statements is true regarding forward contracts,futures contracts,options and swaps?

• A)A forward contract can be purchased on the open market and is recorded at its historical cost,then adjusted for changes in the market.
• B)A futures contract is negotiated between two parties who are betting in the opposite direction on the movement of the underlying price.
• C)An option is a contract requiring the holder to either "put" or "call" an underlying asset at a specified point in time.
• D)A swap is a contract between two parties to exchange an ongoing stream of cash flows.

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Definitions:

Inventory

The total amount of goods and materials held by a company to support production, fulfill orders, and maintain service levels.