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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Polytot 6/04
Dear Tutor,
I am a bit confused about the following statement written in the answer to this question.
“Of these two methods, the forward contract has less risk and requires less administration, though in this case it is predicted to produce slightly worse results”
Is the statement about less administration true, because for futures gain and losses are calculated on a daily basis? Additionally, does the statement about less risk relate to the fact that the futures are traded on exchange and there is the issue of basis risk?
Thank you
Yes – what you have written in your final paragraph is correct 🙂
Thank you for your quick reply.
You are welcome 🙂