Which of the following observations is true of forwards contracts?
A)Substantial margin is required to initiate a contract.
B)Must be completed either with the underlying's future delivery or net
C)cash settlement.
D)Cannot be customized;for a specific amount at a specific date.
E)Usually settled with a net cash amount prior to maturity date.

Question

Quizplus · Accepted Answer

Forwards contracts must be completed either with the delivery of the underlying asset or with net cash settlement upon maturity. The other options are not true. Substantial margin is not always required, forwards contracts can be customized, and they are not always settled with a net cash amount prior to maturity.

Which of the Following Observations Is True of Forwards Contracts