Which of the following statements regarding long-term supply contracts is FALSE?
A) The market value of the contract at any point in time may not be easy to determine, making it difficult to track gains and losses.
B) Long-term supply contracts are designed to eliminate credit risk.
C) Long-term supply contracts insulate the firms from commodity price risk.
D) Long-term supply contracts are bilateral contracts negotiated by a buyer and a seller.
Answer: B
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