The type of risk associated with a forward contract is called:
A) market risk
B) default risk
C) currency risk
D) counterparty risk

Question

Quizplus · Accepted Answer

Forward contracts have counterparty risk, which is the risk that the other party in the contract will default on their obligation. Market risk and currency risk may also be present, but they are not the primary type of risk associated with forward contracts. Default risk is another term for counterparty risk.

The Type of Risk Associated with a Forward Contract Is