Determine which of the following statements about futures and forward contracts is false. (A) Frequent marking-to-market and
Question:
Determine which of the following statements about futures and forward contracts is false.
(A) Frequent marking-to-market and settlement of a futures contract can lead to pricing differences between a futures contract and an otherwise identical forward contract.
(B) Over-the-counter forward contracts can be customized to suit the buyer or seller, whereas futures contracts are standardized.
(C) Users of forward contracts are more able to minimize credit risk than are users of futures contracts.
(D) Forward contracts can be used to synthetically switch a portfolio invested in stocks into bonds.
(E) The holder of a long futures contract must place a fraction of the cost with an intermediary and provide assurances on the remaining purchase price.
Step by Step Answer:
C Futures contracts are more ...View the full answer
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