Which of the following statements is (are) correct about a forward contract?
I. Forward contracts require a good faith deposit before an agreement can be reached.
II. Forward contracts are considered extremely risky since the price for the asset is determined when the contract matures.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Question

Which of the following statements is (are) correct about a forward contract? 
I. Forward contracts require a good faith deposit before an agreement can be reached.
II. Forward contracts are considered extremely risky since the price for the asset is determined when the contract matures.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Quizplus · Accepted Answer

Forward contracts do not typically require a good faith deposit; they are private agreements between two parties. While they can be risky due to price movements, the price is agreed upon at the contract's inception, not when it matures.

Which of the Following Statements Is (Are) Correct About a Forward