Which of the following statements is NOT correct regarding forward contracts?
A)They are typically negotiated with a commercial bank
B)They are standardized contracts that represent a standard number of units and have a specific maturity date.
C)They are sometimes referred to in terms of their percentage premium or discount.
D)They can be used to hedge a corporation's risk that a currency's value may appreciate or depreciate over time.

Question

Quizplus · Accepted Answer

Forward contracts are not standardized; they are private agreements between two parties and can be customized in terms of size, maturity, and other terms. Futures contracts, not forwards, are standardized.

Which of the Following Statements Is NOT Correct Regarding Forward