e forward rate is not at parity during the outset of the contract, which theory of term structures does this violate

Q: If a contract modification adds distinct goods or services and the contract price increases by an…

A: Any modification in the price or scope or both with regard to a contract by the parties to the…

Q: one key difference between option contracts aND FUTURE CONTRACTS IS THAT IN AN OPTION CONTRACT, THE…

A: Option Contract-An options contract is a contract between two parties to facilitate a potential…

Q: What is the difference between contingent claims (options) and forward

A:

Q: Why onerous contracts are considered as a provision, even though they do not always come with a high…

A: Onerous contract is the contract that would cost the business more to fulfill than what the company…

Q: As a general rule, one of the elements needed to make an agreement binding is consideration. True…

A: Consideration: A promisee gives a promisor something in exchange for it. Real or personal property,…

Q: Which of the following are criteria for determining whether an embedded derivative is required to be…

A: Solution: As per IAS 39, An embedded derivative is a feature within a contract, such that the cash…

Q: When a contract includes an option to buy additional goods or services, when does that option give…

A: Contract: Contract is a written document that creates legal agreement between the parties for buying…

Q: Explain the difference between the forward price and the value of a forward contract. Give an…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: What is the difference in Forward Contracts and Future Contracts

A:

Q: What is the difference between an Offer for a unilateral contract and an Offer for a bilateral…

A: In unilateral contracts, one party offering the deal promises to pay when a certain act or task is…

Q: CFD is a derivative contract. Yes or No

A: Contract for Difference are also called as CFDs.

Q: what is fixed-price contract, and what are the benfit of chosing it

A: A contract where the price is fixed as negotiated by the parties is known as a Fixed Price Contract.…

Q: True or False. An arbitration clause in a contract requires that any dispute concerning the contract…

A: The arbitration clause works in case of legal disputes between parties. It deals with the party's…

Q: 1. If the forward rate is not at parity during the outset of the contract, which theory of term…

A: Step 1 Interest rate parity (IRP) is a hypothesis that states that the difference in interest rates…

Q: Which of the following is true about forward contract expiration?  a.A deliverable forward contract…

A: On the date of expiration of a forward contract, settlement can be made on delivery basis or on cash…

Q: The contract of sale is a consensual contract.   a. True b. False

A: Sales on Account A sales on account revenue is revenue earned by a company by selling its goods on…

Q: In Swap contract one counter party has an obligation but not right, while in an option contract the…

A: Swap is a contract between two parties to exchange cash flows of a contract to each other. The leg…

Q: 7. Provide an example of when the principle of a quasi-contract may be enforced by the court?

A: The answer for the theory question on Quasi contract is discussed hereunder : The enforcement of a…

Q: Is variable consideration included in the calculation of a contract’s transaction price? If so, how…

A:

Q: The major difference between future and option arises from the different obligations of buyers and…

A: The option and future are used to hedge investment as well as to make money and it represents the…

Q: When is a forward contract preferred over an option contract ?

A: Forward contract and Option contract Option contract gives the right to the holder to buy or sell…

Q: Is the “forward price” the same thing as the “value of the forward contract” Explain.

A: Derivative is defined as the contract, which are between the two or more parties, who has the value…

Q: What is an onerous contract? Give two examples of an onerous contract.

A: When the cost of carrying out unavoidable obligations exceeds the benefit expected to be received…

Q: What is an option? How does an Option differ from a forward or future contract?

A: Derivative Security: A derivative is financial security whose price and value are determined based…

Q: Which of the following is not a condition in the determination of when a valid contract exists: O…

A: In accordance with IFRS 15, a contract with a customer is said to exists only if the following…

Q: Does contract modification always result in a new contract if the modification adds distinct goods…

A: The given situation can be linked with International Financial Reporting Standards (IFRS) 15 which…

Q: Either party can choose to the contract in cases where both partiess to a contract are mistaken…

A: Mutual Mistakes is the result of an error by both parties about a material fact, i.e., one that is…

Q: Compare and contrast the istijrar contract with its closest conventional contract. What are the main…

A: Istijrar refers to the purchase of commodities in varying quantities on a regular basis. In Islamic…

Q: Which of the following is NOT true. An options contract is a contractual agreement between two…

A: Option trading allows a person to buy or sell an asset at a particular price. The price of an option…

Q: An antenuptial contract must be notarially executed to be valid between the contracting parties.…

A: A contract entered into by a couple before their marriage, and restricting to retain their assets…

Q: If a contract modification does not create a separate contract, it is accounted for using either a…

A: The correct answer is “either a cumulative catch-up adjustment or a prospective approach”.

Q: How might the definition of “probable” affect determining whether a contract exists under IFRS as…

A: GAAP: GAAP stands for “Generally Accepted Accounting Principles”. It provides the accounting rules…

Q: Do you believe that Bills of exchange cannot be voided? Yes, or No, and Why?

A: In this question, we will explain that Bills of exchange can be voided or not .

Q: . Which of the following may not be equal to the contract rate of interest? a. stated rate b.…

A: Contract rate of interest is the defined rate of interest on bonds, notes or loan.

Q: The proper remedy for the following cases is reformation of the instrument, except for one. Which is…

A: Reformation can be defined as the remedy by means of which a written instrument is rectified or…

Q: Give the FIRST exception to the general rule that: If the consideration of the contract consists…

A: If the consideration of the contract consists partly in money and partly in another thing, the…

Q: on the date of expiry, the price of an expiring forward or future contract must be equal to the spot…

A: Convergence means the movement of the future price of the contract towards the spot price of the…

Q: . A contract of adhesion is a: A. take or leave it contract. B. charging above the maximum interest…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: In which of the following contracts BOTH parties have an OBLIGATION to exercise the contract?   a)…

A: In finance, Obligation refers to the liability or mandatory action for either acquiring an asset or…