Which of the Following Statements About Forwards Is False

question 13

Multiple Choice

Which of the following statements about forwards is false?

• A) No payment is typically made at inception of a forward contract.
• B) A forward contract may be settled in cash at maturity.
• C) A futures contract is like a forward contract that is exchange-traded.
• D) The payoff at maturity from a long forward contract is always non-negative (either positive or zero).

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Definitions:

Real Rate Of Return

The yearly percent gain achieved from an investment, corrected for price variations caused by inflation or other external factors.

Inflation Rate

Inflation rate is the annual percentage increase in the general price level of goods and services in an economy over a period of time.

Annually

Occurring once every year, often used to describe financial operations or events that happen yearly.

Interest

The cost of borrowing money, typically expressed as an annual percentage of the loan amount.