Forward contracts are contracts to buy or sell a specified amount of an asset at a specified, fixed price with delivery at a specified future point in time. Which of the following is true about these contracts?a.The party that agrees to buy the asset is said to be in a short position.b.The party that agrees to sell the asset is said to be in a long position.c.The specified, fixed price in the contract is known as the forward rate.d.A forward contract requires an initial deposit of funds with the transacting broker.

Answered: orward contracts are contracts to buy…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Forward contracts are contracts to buy or sell a specified amount of an asset at a specified, fixed price with delivery at a specified future point in time. Which of the following is true about these contracts?

a.	The party that agrees to buy the asset is said to be in a short position.
b.	The party that agrees to sell the asset is said to be in a long position.
c.	The specified, fixed price in the contract is known as the forward rate.
d.	A forward contract requires an initial deposit of funds with the transacting broker.

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