Futures Differ from Forward Contracts Because

question 63

Multiple Choice

Futures differ from forward contracts because

• A) futures have more liquidity risk.
• B) futures have more credit risk.
• C) futures have more maturity risk.
• D) futures do not require collateral.
• E) None of these are correct.

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Definitions:

Inventory Cost

Inventory cost includes all expenses associated with acquiring, holding, and processing goods that are to be sold, including the costs of materials, labor, and overhead.

Customer Demand

The desire and willingness of consumers to purchase goods and services at given prices.

Inventory Turnover

A ratio that measures how often a company sells and replaces its stock of goods within a certain period, indicating efficiency in inventory management.

Average Inventory

The average value of a company's inventory over a specific period, calculated by adding the beginning and ending inventory and dividing by two.