One of the limitations of a forward contract is that:
A) it is very difficult to frame and understand the agreement.
B) the seller cannot be sure of the amount she will receive on settlement date.
C) it is costly to find a willing counterparty.
D) the prices in the forward market are highly volatile.

Question

Quizplus · Accepted Answer

Forward contracts often involve the challenge of finding a willing counterparty, as they are private agreements and not traded on centralized exchanges. This can make it costly and time-consuming to enter into a forward contract.

One of the Limitations of a Forward Contract Is That