Which of the following is true with regards to financial forward agreements?
A)Financial forward agreements trade standardized quantities of financial instruments on specified dates in the future.
B)Financial forward agreements can be used to hedge risk but not to speculate.
C)Financial forward agreements in foreign exchange are arranged by large banks as a natural outgrowth of their foreign exchange operations.
D)Financial forward agreements that hedge interest rate risks entail little costs because offsetting partners are easy to find.

Question

Quizplus · Accepted Answer

Financial forward agreements in foreign exchange are commonly arranged by large banks as they have the expertise and access to the market needed to facilitate such agreements. They allow parties to fix the exchange rate for a future transaction, reducing the risk of currency fluctuations.

Which of the Following Is True with Regards to Financial