58.C: DISTINGUISH BETWEEN A DEALER AND AN END USER OF A FORWARD CONTRACT;

Question 1

58. C DISTINGUISH BETWEEN A DEALER AND AN END USER OF A FORWARD CONTRACT;

Answer 1

Dealer and End user

• End user of a forward contract:

• Corporation
• Government unit
• Non-profit institution

• Dealers:

Question 2

Dealer

Answer 2

• banks (UBS)
• Non-banking institutions (securities brokers)(ML, GS)

‘Deal’(transact) w/ end users and other dealers, and layoff risk to each other.

Question 3

End-User

Answer 3

A party w/ risk management prob that is searching for a dealer to provide a financial transaction to solve prob. Rather, end user has a risk it wants to reduce or eliminate.

Corporation
Non-Profit
Gov