n NISM Certifications
X NISM Series X
Medium

A forward contract __________ the uncertainty of price for both the buyer and the seller.

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Increases

  2. Reduces

    Correct answer

  3. C

    Has no effect on

  4. D

    Has marginal effect on

Why this is the answer

Forward contracts hedge against price volatility, thus reducing uncertainty.

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