Commodity forward contracts differ from financial forwards in the following manner:
A)The underlying asset in a commodity forward is an asset that may be used in production and that gets consumed in the process.
B)Commodity forwards are always more costly than financial forwards when the spot assets have the same prices.
C)Commodity forwards have physical delivery whereas financial forwards have cash delivery.
D)Commodity forwards do not have inconvenience yields whereas financial forwards do.

Question

Quizplus · Accepted Answer

Commodity forwards often involve underlying assets that are consumed in production, such as oil or wheat, whereas financial forwards involve financial instruments like currencies or interest rates.

Commodity Forward Contracts Differ from Financial Forwards in the Following