Forward contracts are often illiquid because
A)any capital gains on them are heavily taxed, making investors reluctant to sell them.
B)government regulation has not provided for a secondary market in them.
C)they generally contain terms specific to the particular buyer and seller.
D)the brokerage fees involved in buying and selling them are very high.

Question

Quizplus · Accepted Answer

Forward contracts are often illiquid because they are customized agreements between two parties, which means their terms are specific to the needs of the buyer and seller involved. This customization makes it difficult to find another party willing to take over the contract under the same terms, leading to illiquidity.

Forward Contracts Are Often Illiquid Because