A private agreement between two parties to swap currencies on a set future date is a:
AForfeit contract
BFormal contract
CFounding contract
DForward contract
Answer & Solution
Correct answer: D. Forward contract
1. It is not standardised or exchange traded.
2. The two parties set amount and date themselves.
3. That is a forward contract.
_Source: OpenStax Principles of Finance 2e, Chapter 20, Risk Management and the Financial Manager._
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