Fluctuations in the price of the underlying security or commodity during the life of forward transactions
A)have no effect on the contracting parties.
B)are disallowed under current government regulations.
C)confer capital gains and losses on the contracting parties.
D)will occur during times of extreme economic instability.

Question

Quizplus · Accepted Answer

Fluctuations in the price of the underlying security or commodity during the life of forward transactions confer capital gains and losses on the contracting parties. This means that the parties to the forward contract can make a profit or suffer a loss depending on how the price of the security or commodity changes over time. They have to be prepared to accept the risks involved in such fluctuations.

Fluctuations in the Price of the Underlying Security or Commodity