Which of the following observations is true of forwards contracts?
A) Substantial margin is required to initiate a contract.
B) Must be completed either with the underlying's future delivery or net cash settlement.
C) Cannot be customized; for a specific amount at a specific date.
D) Usually settled with a net cash amount prior to maturity date.

Question

Quizplus · Accepted Answer

Forwards contracts are agreements to buy or sell an asset at a future date for a price agreed upon today, and they must be completed either by delivering the underlying asset or through net cash settlement.

Which of the Following Observations Is True of Forwards Contracts