CFA CFA Level 1 Question of the Week – Derivatives

Question of the Week – Derivatives

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    • AdaptPrep
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      In April, a farmer goes to the local co-op and puts together a contract agreeing to sell 10,000 bushels of corn at $6.50 a bushel on November 1. This type of an agreement is best described as a:

      • Forward contract
      • Futures contract
      • Swap
    • AdaptPrep
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      This is a forward
      contract
      , an agreement between two parties to sell an asset at a certain
      price at a certain time.

      Futures contracts are more standardized and bought and sold
      on an exchange.

      Swaps are a series of forward contracts. While the case
      could be made that a forward contract is just a single-series swap, the
      description
      best describes forward
      contracts.

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