QUESTION

27

Which of the following statements correctly describes

the future contracts?

a.   

They are tailor-made instruments that are traded over

the formal exchange.

b.   

They are standardised financial instruments that are

traded over the formal exchange.

c.    

Because of their nature, it can be concluded that they

are liquid and have a very low credit risk

d.   

Because they are tailor-made, it is difficult to get

out of the contract once they have been established.

1.       a and b

2.       b and c

3.       a and c

4.       c and d