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LOS c: Differentiate between a dealer and an end user of a forward contract.
Q1. Which of the following statements regarding forward contract dealers is FALSE?
A) Forward contract dealers are often banks.
B) Dealers are compensated through up-front payments by the parties to forward contracts.
C) Dealers offer long and short forward contracts at different prices.
Q2. All of the following are typically end users of forward contracts EXCEPT:
A) non-profit institutions.
B) a forwards dealer.
C) governmental units.
Q3. Which statement regarding forward contract dealers is least accurate?
A) They bear default risk but not asset-price risk.
B) Not all of them are banks.
C) They try to balance their long and short positions to limit risk.
Q4. Which of the following statements regarding forward contracts is FALSE?
A) End users of forwards most often have a business exposure to price risk from the asset covered by the contract.
B) Dealers make the majority of their profits by anticipating price moves in the underlying asset.
C) Dealers will enter into forward contracts with other dealers.
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发表于 2009-3-2 09:46
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