Which of the following statements is true regarding forward contracts,futures contracts,options and swaps?
A) A forward contract can be purchased on the open market and is recorded at its historical cost,then adjusted for changes in the market.
B) A futures contract is negotiated between two parties who are betting in the opposite direction on the movement of the underlying price.
C) An option is a contract requiring the holder to either "put" or "call" an underlying asset at a specified point in time.
D) A swap is a contract between two parties to exchange an ongoing stream of cash flows.
Correct Answer:
Verified
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