Reading 68: Forward Markets and Contracts LOSa习题精选 2010, default, contract, applies

honeycfa

LOS a: Explain delivery/settlement and default risk for both long and short positions in a forward contract.

Default risk in a forward contract:

A) only applies to the short, who must make the cash payment at settlement.

B) only applies to the long, and is the probability that the short can not acquire the asset for delivery.

C) is the risk to either party that the other party will not fulfill their contractual obligation.

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Default risk in forward contracts is the risk to either party that the other party will not perform, whether that means pay cash or deliver the asset.

 

honeycfa

Default risk in a forward contract:

A) only applies to the short, who must make the cash payment at settlement.

B) only applies to the long, and is the probability that the short can not acquire the asset for delivery.

C) is the risk to either party that the other party will not fulfill their contractual obligation.

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Default risk in forward contracts is the risk to either party that the other party will not perform, whether that means pay cash or deliver the asset.

honeycfa

Default risk in a forward contract:

A) only applies to the short, who must make the cash payment at settlement.

B) only applies to the long, and is the probability that the short can not acquire the asset for delivery.

C) is the risk to either party that the other party will not fulfill their contractual obligation.

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Default risk in forward contracts is the risk to either party that the other party will not perform, whether that means pay cash or deliver the asset.

honeycfa

Which of the following statements about forward contracts is least accurate?

A) The long promises to purchase the asset.

B) A forward contract can be exercised at any time.

C) Both parties to a forward contract have potential default risk.

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Forward contracts typically require a purchase/sale of the asset on the expiration/delivery date specified in the contract. The other statements are true.