Question

Which of the following is not an objective of a forward

Q: Answer-Which of the following is not an objective of a forward contract?

A forward contract is an agreement between two parties to trade a specific quantity of an asset for a pre-specified price at a specific date in the future. The primary objective of forward contracts is to manage the risks associated with fluctuating prices of the underlying asset. The objective is not to make profit but to minimise loss.

contract?

A Lock a future price for a commodity

B Reduce risk of loss due to adverse movement in price of an asset in future

C Lower transactions costs for future

D Help in better price discovery of the underlying asset

E Earn profit on an underlying asset

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Which of the following is not an objective of a forward

Solution