Which of the following is a disadvantage of a forward transaction?
A)Sellers are prevented from hedging.
B)They have high transactions costs.
C)There is a possibility of one party defaulting.
D)Both b and c are disadvantages.

Question

Quizplus · Accepted Answer

The high transaction costs involved in a forward transaction are a disadvantage, as it can negatively impact the profitability of the transaction. Additionally, there is always a risk of default, which is another significant disadvantage. Therefore, both options B and C are correct as the disadvantages of forward transactions.

Which of the Following Is a Disadvantage of a Forward