Derivatives Q95

0. If the present value of the payments in a forward contract or swap is not zero, then:

A
the party receiving the lower present value must compensate the other party with a cash payment at the start.
B
the party receiving the greater present value must compensate the other party with a cash payment at the start.
C
such a contract cannot legally be created.

Answer
Comment
Array

Option : B
Explanation : Such a contract can legally be created, but the party receiving the greater present value must compensate the other party with a cash payment at the start.

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