Which of the following is NOT a major problem with forward contracts?
A) It is often costly/difficult to find a willing counterparty.
B) The market for forward contracts is illiquid as they are not easily sold to other parties.
C) The market is highly regulated.
D) One party usually has an incentive to break the agreement.

Question

Quizplus · Accepted Answer

The market for forward contracts is not highly regulated compared to futures markets. Forward contracts are private agreements between parties and thus lack the standardization and regulatory oversight seen in futures markets.

Which of the Following Is NOT a Major Problem with Forward