Forward contracts:
A) contain a commitment to the owner, and are standardized.
B) contain a commitment to the owner, and can be tailored to the desire of the owner.
C) contain a right but not a commitment to the owner, and can be tailored to the desire of the owner.
D) contain a right but not a commitment to the owner, and are standardized.

Question

Quizplus · Accepted Answer

Forward contracts contain a commitment to the owner but can be tailored to the desire of the owner, making choice B the best answer. Choice A is incorrect because forward contracts are not standardized. Choice C is incorrect because it suggests that a right but not a commitment exists in forward contracts, which is inaccurate. Choice D is incorrect because it suggests that forward contracts are standardized, which is also inaccurate.

Forward Contracts