A forward contract
A)is not traded on an organized exchange and is customized to meet the needs of the parties.
B)is not traded on an organized exchange and is subject to formal regulation which results in standardized contracts.
C)is traded on an organized exchange and is subject to formal regulation which results in standardized contracts.
D)is traded on an organized exchange and is customized to meet the needs of the parties.

Question

A forward contract
A)​is not traded on an organized exchange and is customized to meet the needs of the parties.
B)​is not traded on an organized exchange and is subject to formal regulation which results in standardized contracts.
C)​is traded on an organized exchange and is subject to formal regulation which results in standardized contracts.
D)​is traded on an organized exchange and is customized to meet the needs of the parties.

Quizplus · Accepted Answer

A forward contract is an agreement between two parties to buy or sell an asset at a future date at an agreed-upon price. It is not traded on an organized exchange, and the terms of the contract are customized to meet the needs of the parties involved. There is no formal regulation governing forward contracts, and the parties rely on each other's creditworthiness to fulfill the terms of the contract.

A Forward Contract