Search Header Logo

Derivatives- Topic 4/ Forward contract

Authored by Hanh Le Hong

Business

University

Used 2+ times

Derivatives- Topic 4/ Forward contract
AI

AI Actions

Add similar questions

Adjust reading levels

Convert to real-world scenario

Translate activity

More...

    Content View

    Student View

12 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a forward contract?

A financial instrument that pays interest.

A standardized contract traded on an exchange.

An option to buy or sell an asset at a future date at a price specified today.

An agreement to buy or sell an asset at a future date at a price specified today.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is true about a forward contract?

It is traded on an exchange

It is a standardized contract

It is an over-the-counter (OTC) contract

It is marked to market daily

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In a forward contract, the price specified for future delivery is called the:

Spot price

Forward price.

Exercise price

Premium

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The cost of carry in a forward contract refers to:

The cost of transporting the underlying asset.

The cost associated with holding the asset until the contract’s expiration.

The cost of entering into the contract.

  • The transaction cost paid to the broker.

5.

MULTIPLE CHOICE QUESTION

45 sec • 1 pt

Which of the following best describes the outright forward in foreign exchange (FRX)?

A contract for immediate delivery of foreign currency.

A currency swap agreement.

A contract for future delivery of foreign currency at a specified rate.

A standardized futures contract for foreign currency.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does the settlement of a forward contract involve?

Daily margin adjustments

Delivery of the underlying asset or cash equivalent at the contract’s maturity

Closing the contract before maturity

Paying a premium at contract initiation.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If the spot price of an asset is $100 and the forward price for a 1-year contract is $110, what does this imply about the cost of carry?

The cost of carry is negative.

The cost of carry is zero

The cost of carry is $10.

The cost of carry is $110.

Access all questions and much more by creating a free account

Create resources

Host any resource

Get auto-graded reports

Google

Continue with Google

Email

Continue with Email

Classlink

Continue with Classlink

Clever

Continue with Clever

or continue with

Microsoft

Microsoft

Apple

Apple

Others

Others

Already have an account?