CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

Which of the following statements best characterizes forward stock markets like the London and Paris markets?

A. Investors buy and sell contracts for future delivery of shares, but the shares themselves do not change ownership.
B. Settlement of transactions takes place infrequently, such as one day each month.
C. Even after a transaction has been consummated, the price is not determined until a specified date in the future.
D. Change in ownership of a stock takes place on the day of the transaction, although money is not exchanged until five business days later.
Correct Answer: B

User Contributed Comments 9

User Comment
anita forward market .. unlike futures market wehre transactions takes place daily .. in forward market it takes place infrequently
0is4eva Exclude A, C and D as they are illogical in this context. Remaining: B.
Reading 69: "Forward contract ... an agreement between two parties in which one party, the buyer, agrees to buy from the other party, the seller, an underlying asset at a future date at a price agreed upon at the start." "It is generally conceded, however, that London and New York are the primary markets for over-the-counter derivatives;"
Nikita I am not seeing a response why the answer is B Ois4eva on what you posted .... can you clarify?
Rotigga Use process of elimination. Everything except B doesn't make sense.
long2012 Infrequently means not every day as future. So B is correct.
To-be-CFA A: Ownership of shares is possible.
B: Settlement happens at expiration, and not everyday.
C: Price is pre-determined at the initiation of the contract.
D: 5 days point has no relevance.
ankurwa10 the term forward stock market confused me. It implies an organised exchange. but then, well I am nitpicking.
Rachelle3 not everyday = infrequent makes sense to me!
yinlina infrequently,oh yeah
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