CFA CFA Level 1 Question of the Week – Derivatives

Question of the Week – Derivatives

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    • Avatar of AdaptPrepAdaptPrep
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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
      • Avatar of AdaptPrepAdaptPrep
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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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