Major Disadvantage of Forward and Futures Contracts Relative to Options

question 14

Multiple Choice

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

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Definitions:

Tenacious Secretions

Thick and sticky bodily fluids that are hard to expel, often seen in respiratory conditions.

Trendelenburg's Position

A body position where the patient lies flat on their back with the legs elevated higher than the head, used for various medical purposes.

Gastroesophageal Reflux Disease (GERD)

A digestive disorder where stomach acid or bile irritates the food pipe lining, leading to heartburn and acid reflux.

Distended Abdomen

The condition of having an abnormally swollen or enlarged belly, which can result from various medical conditions like fluid accumulation, gas, or obstruction.