A Forward Price Can Differ from a Futures Price Due

question 5

Multiple Choice

A forward price can differ from a futures price due to any one the following EXCEPT:

• A) the two contracts have different commodity price risks
• B) the two contracts have different credit risks
• C) the two contracts have different legal risks
• D) the two contracts have different interest rate risks in the reinvestment of cash flows
• E) the contracts are structured as different entities-a forward has a terminal cash flow,while futures have daily cash flows

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