Canadian Securities Course (CSC) Practice Exam · Question
What does a forward contract obligate the parties to do?
A forward contract is a customized agreement between two parties to buy or sell an asset at a specified price on a future date. Unlike options, both parties are
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Question: What does a forward contract obligate the parties to do?
Answer options: ✅ To exchange an asset at a predetermined price on a future date.
- To buy or sell an asset at a specified price, with the option to decline.
- To agree on an asset exchange with no specific future date.
- To purchase an asset at the current market price in the future.
Correct answer: To exchange an asset at a predetermined price on a future date.
Explanation: A forward contract is a customized agreement between two parties to buy or sell an asset at a specified price on a future date. Unlike options, both parties are obligated to honor the contract.
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