1. A two party agreement where one party agrees to buy and the other agrees to sell a 500 bushels of wheat on October 30 at $2.20 per bushel is an example of _FORWARD AGREEMENT_. 2. Basic forward agreement is a) very liquid b) slightly liquid c) not liquid. 3. Basic forward agreement requires a) periodic payment from one party to another b ) only a payment at the start of the forward agreement Only at the expiration of the agreement. . With the basic forward agreement the parties a) Are exposed to counter party risk b) Are not exposed to counter party risk c) Have collateral to eliminate exposure to counter party risk 5. At expiration, the buyer receives $10,000 face value of treasury bonds and pays the writer the forward price. a) This forward agreement has the feature "with delivery" b) This forward agreement has the feature " cash settlement" 6. The forward price is $26 and the stock price is $22. Which statement is true? a) Buyer pays seller $4 Buyer receives from seller $4 c) No money is transferred 7. The forward price is $20 and the stock price is $22. Which statement is true? a) Buyer pays seller $2 b) Buyer receives from seller $2 c) No money is transferred 8. Novation means a) The buyer can back out of the deal without penalty b) The buyer's positon can be passed on to another investor. The seller's positon can be passed on to another investor. d) Both the buyer's and seller's positons can be passed on to another investors. 9. Novation is also called assignability a) True b) False