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5 July, 21:09

Which of the following is true about a long forward contractA. The contract becomes more valuable as the price of the asset risesB. The contract is worth zero if the price of the asset rises after the contract has been entered intoC. The contract is worth zero if the price of the asset declines after the contract has been entered intoD. The contract becomes more valuable as the price of the asset declines

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  1. 5 July, 22:22
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    Answer: The correct answer is "A. The contract becomes more valuable as the price of the asset rises".

    Explanation: The statement "A. The contract becomes more valuable as the price of the asset rises" is TRUE about long forward contract because this type of contract is an agreement to buy a certain product, that is, an asset, at a price that is predetermined in advance, therefore if the price of this asset increases, the contract becomes more attractive.

    In the only case that the contract is worth 0 is when the current price is the same as the default.
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Home » Business » Which of the following is true about a long forward contractA. The contract becomes more valuable as the price of the asset risesB. The contract is worth zero if the price of the asset rises after the contract has been entered intoC.
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