The Major Disadvantage of Forward and Futures Contracts Relative to Options

question 1

Multiple Choice

The major disadvantage of forward and futures contracts relative to options is that the forwards and futures contracts

• A) cannot protect the holder against the risk of adverse movements in exchange rates
• B) are more expensive
• C) are available only for relatively short maturities
• D) eliminate the possibility of gaining a windfall profit from favorable movements in exchange rates

---

Definitions:

Workplace Bullying

Repeated and systematic aggressive behavior by an individual or group towards a coworker or group of coworkers, causing psychological or physical harm.

Victim

An individual or group that suffers harm, injury, or loss as a result of voluntary or involuntary actions or circumstances.

Side Effect

An unintended consequence of an action or decision that might be harmful or beneficial.

Implied Falsity

A form of misinformation that suggests a false narrative or conclusion through implication or omission, without making overtly false statements.