A forward contract differs from a futures contract in that:
A)A forward contract calls for delivery on a specific date, whereas a futures contract permits the seller to decide later which specific day within the specified month will be the delivery date (if it gets as far as actual delivery before it is closed out).
B)Unlike a futures contract, a forward contract usually is not traded on a market exchange.
C)Unlike a futures contract, a forward contract does not call for a daily cash settlement for price changes in the underlying contract.Gains and losses on forward contracts are paid only when they are closed out.
D)All of these are correct.

Question

Quizplus · Accepted Answer

All of these are correct. A) A forward contract specifies a particular delivery date, while a futures contract allows the seller to choose a specific date within the designated month. B) Unlike futures contracts, forward contracts are not traded on a market exchange. C) Forward contracts do not require daily cash settlements, and gains and losses are only paid upon completion of the contract.

A Forward Contract Differs from a Futures Contract in That