Question: When comparing futures and forward contracts, it has been said that futures are more liquid but forwards are more flexible. Explain what this statement means

When comparing futures and forward contracts, it has been said that futures are more liquid but forwards are more flexible. Explain what this statement means and comment on how differences in contract liquidity and design flexibility might influence an investor's preference in choosing one instrument over the other.

Step by Step Solution

★★★★★

3.44 Rating (160 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

It is generally true that futures contracts ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

370-B-A-I (4630).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

It has been said that people buy things not for what they will do, but for what they mean. Discuss this statement in relation to observation research.

It has been said that a prior departments costs behave similarly to direct materials costs. Under what conditions are the costs similar? Why account for them separately?

It has been said that there is no such thing as a sustainable strategic advantage. Do you agree? Why or why not?

1. Explain why the difference between put and call prices depends on whether or not the un-derlying security pays a dividend during the life of the contracts. 2. When comparing futures and forward...

Please be detail in explanation Roland and Palmer have been informed by their financial manager that their business has a temporary cash surplus. They are unsure of how to invest it safely. They are...

When comparing futures and forward contracts, it has been said that futures are more liquid but forwards are more flexible. Explain what this statement means and comment on how differences in...

When comparing futures and forward contracts, it has been said that futures are more liquid, but forwards are more flexible. A. Explain what this statement means and comment on how differences in...

2. When comparing futures and forward contracts, it has been said that futures are more liquid but forwards are more flexible. Explain what this statement means and comment on how differences in...

a) Discuss why estimating the value for a bond is easier than estimating the value for a common stock b) When comparing futures and forward contracts, it has been said that futures are more liquid...

2. When comparing futures and forward contracts, it has been said that futures are more liquid but forwards are more flexible. Explain what this statement means and comment on how differences in...

We are interested in investigating whether males and females have equal levels of education. Use the variable EDUC with the Frequencies procedure to produce frequency tables and the mean, the median,...

Write a paper on BREXIT. 1. What is BREXIT? 2. Looking only at economics issues describe and discuss (a) the reasons for BREXIT and (b) the reasons against BREXIT. 3. In your opinion, is BREXIT a...

9.44 Referring to Exercise 9.43, find a 99% confidence interval for 1 2 if tires of the two brands are assigned at random to the left and right rear wheels of 8 taxis and the following distances, in...

The tick mark most likely indicates that the amount was traced to the a. Deposits in transit of the applicable bank reconciliation. b. December cash receipts journal. c. January cash receipts...

Why is the time value of money so important in capital budgeting decisions?

If the time value of money is so important, why isnt the timing of cash flows emphasized in the accounting cycle?

How is depreciation expense treated when the discounted cash flow methods are used? Why?

Unless mentioned otherwise, assume: 1) EBIT is a level perpetuity. 2) Tax rate is zero. 3) Market is efficient. 4) CAPM is valid. 5) Bonds are perpetual. Prob1) IBM has a beta of 1. Expected return...

The marketing company for a major music recording label is interested in whether there is a relationship between how an individual consumer rates a performer's physical attractiveness and how likely...

Using the financial statements for Happy Hamburger Company below: Calculate the indicated ratios for Happy Hamburger. Discuss Happy Hamburgers strengths and weaknesses as revealed by your analysis....