Which of the following statements regarding long-term supply contracts is FALSE?
A) Long-term supply contracts are designed to eliminate credit risk.
B) Long-term supply contracts insulate the firms from commodity price risk.
C) Long-term supply contracts are bilateral contracts negotiated by a buyer and a seller.
D) The market value of the contract at any point in time may not be easy to determine, making it difficult to track gains and losses.
Correct Answer:
Verified
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