CFA Practice Question
Which of the following regarding a forward contract is false, if cash is considered as an asset?
A. The price at which the exchange occurs is set at the time of the initial contracting.
B. The forward contract involves one asset.
C. Actual payment and delivery of the good occur later.
Explanation: A forward contract involves an exchange of one asset for another. It does not involve only one asset. The price at which the exchange occurs is set at the time of the initial contracting and actual payment and delivery of the good occur later.
User Contributed Comments 4
| User | Comment |
|---|---|
| shasha | for exchange of one asset with monetary payment, don't we call it forward? |
| alki | if monetary pmt which is cash in this case is considered as an asset(mentioned in q), there will be more than one asset exchanged at settlemet... |
| Kuki | Have to admit, this one foxed me! |
| jackwez | got me too... ARG! |