A forward contract hedge is very similar to a futures contract hedge, except that ____ contracts are commonly used for ____ transactions.
A)forward; small
B)futures; large
C)forward; large
D)none of the above

Question

Quizplus · Accepted Answer

A forward contract hedge is used for large transactions because it involves a customized contract between two parties, whereas futures contracts are standardized and traded on an exchange, making them more suitable for smaller transactions.

A Forward Contract Hedge Is Very Similar to a Futures