n NISM Certifications
XXI NISM Series XXI-A
Medium

A person dealing in a Forward Contract is expected to face which of the following risk(s)?

Practice question from NISM XXI A for PMS - Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Liquidity Risk

  2. B

    Market Risk

  3. Both Liquidity Risk and Market Risk

    Correct answer

  4. D

    None of the above

Why this is the answer

Forwards are private contracts with liquidity risk (difficulty in exit) and market risk (price fluctuations).

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