The usefulness of a forward contract is limited by some problems. Which of the following is most

Question:

The usefulness of a forward contract is limited by some problems. Which of the following is most likely one of those problems?

A. Once you have entered into a forward contract, it is difficult to exit from the contract.

B. Entering into a forward contract requires the long party to deposit an initial amount with the short party.

C. If the price of the underlying asset moves adversely from the perspective of the long party, periodic payments must be made to the short party.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For answer-question

Investments Principles Of Portfolio And Equity Analysis

ISBN: 9780470915806

1st Edition

Authors: Michael McMillan, Jerald E. Pinto, Wendy L. Pirie, Gerhard Van De Venter, Lawrence E. Kochard

See More Books

Question Posted: Mar 21, 2024 07:00 AM

See More Questions

Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
1.Which of the following below is NOT an element of internal control? a. risk assesment b. monitoring c. information and communication d. behavior analysis ANSWER:D 2. Which of the following below is...
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
In the United States, the production of ethanol fuel from corn is subsidized. Use bid rent function analysis to suggest what effects this subsidy might be expected to have on land use.
Assuming the following ratios are constant, what is the sustainable growth rate? Total asset turnover = 2.85 Profit margin = 5.9% Equity multiplier = 1.70 Payout ratio = 60%
Single Audit Quality. In this chapter, information was provided on the report of the National Single Audit Sampling project. The project was the outgrowth of concern over the quality of single...
Teddys daily budget constraint is shown in the following chart. Teddys employer pays him a base wage rate plus overtime if he works more than the standard hours. What is Teddys daily nonlabor income?...
Wolf Creek Golf Inc. was organized on July 1, 2014. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on September 30 are shown here. Instructions (a)...
In calculating the projected misstatement in monetary unit sampling, accounts with a book value larger than the sampling interval are extended to the projected misstatement at their: Multiple Choice...
Tony Harris is planning to start trading in commodities. He has heard about the use of futures contracts on commodities and is learning more about them. Which of the following is Harris least likely...
A friend has asked you to explain the differences between open-end and closed-end funds. Which of the following will you most likely include in your explanation? A. Closed-end funds are unavailable...
In many consumer products companies, marketing executives seem to play the lead role in new-product planning, whereas research and development executives occupy this position in firms with very...
Solve. 10x+10=x+1
For the function g whose graph is given below, arrange the following values in increasing order. B: g (0) A: g'(-2) C: g'(2) D: g' (4)
A 4 . 5 9 % coupon, 2 1 . 0 - year annual bond has a yield to maturity of 6 . 9 3 % . Assuming the par value is 1 , 0 0 0 and the YTM does not change over the next year, Compute the following: a....
Frank invested $ 1 0 , 0 0 0 4 years ago. During that time, he increased his investment by 1 0 times. What annual rate of return did Frank earn on this investment?
A company with 2 million shares outstanding and no debtcurrently has a net income of $ 4 million. The company is considering aninvestment that will cost $ 3 million and increase net income by $ 9 0 0...
A steam pipe with a radius of 2.00 cm, carrying steam at 140oC, is surrounded by a cylindrical jacket with inner and outer radii 2.00 cm and 4.00 cm and made of a type of cork with thermal...
In the current year, Pelican, Inc., incurs $10,000 of meals and entertainment expenses that it deducts in computing net income per the corporations financial statements. All of the meals and...
In the current year, Juanita and Joseph form a two-member LLC and do not file Form 8832 (Entity Classification Election). As a result, the LLC will be treated as a partnership for Federal tax...
A personal service corporation (PSC) generally is limited to the calendar year for reporting purposes. One exception to this rule is when the PSC can demonstrate a business purpose for a fiscal...
You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the companys operations: The cash balance...
The following information is for Callaho Inc.: a. Balance per the bank statement dated November 30, 2023 is $42,200. b. Balance of the Cash account on the company books as of November 30, 2023 is...
Swifty Enterprises sold $740,000 of accounts receivable to Wildhorse Factors, Inc. on a without recourse basis under IFRS, as the risks and rewards have been transferred to Wildhorse. The transaction...

The usefulness of a forward contract is limited by some problems. Which of the following is most

Question:

Step by Step Answer:

A is correct Once you have entered into a forward contract it is d...View the full answer

Investments Principles Of Portfolio And Equity Analysis

Students also viewed these Business questions