Which of the following is INCORRECT regarding foreign exchange rates? Which of t
ID: 433720 • Letter: W
Question
Which of the following is INCORRECT regarding foreign exchange rates?
Which of the following statements is INCORRECT regarding the differences between a forward contract and a futures contract?
Forward contracts can be tailored to meet the needs of any firm.
Futures contracts are usually more expensive than forward contracts since it is easier to sell a futures contract than a forward contract in the financial markets.
A forward contract may not be honored by a bank if the foreign exchange rate moves against the bank.
Futures contracts can only be traded on certain currencies.
Forward contracts can be tailored to meet the needs of any firm.
Futures contracts are usually more expensive than forward contracts since it is easier to sell a futures contract than a forward contract in the financial markets.
A forward contract may not be honored by a bank if the foreign exchange rate moves against the bank.
Futures contracts can only be traded on certain currencies.
Explanation / Answer
A forward contract may not be honored by a bank if the foreign exchange rate moves against the bank. This statement is incorrect.
Answer: Option c
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