Question

What does a Forward contract represent in the context of financial derivatives?

a.

An agreement for the exchange of assets between two parties

b.

An agreement for the exchange of cash at a predetermined future date

c.

An agreement to buy or sell an underlying asset for cash

d.

An agreement between two parties to exchange an asset for cash at a future date

Answer: (d).An agreement between two parties to exchange an asset for cash at a future date Explanation:A Forward contract represents an agreement between two parties to exchange an asset for cash at a predetermined future date.

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Q. What does a Forward contract represent in the context of financial derivatives?

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