Changes in the underlying spot rate of exchange are settled daily in a futures contract whereas they are settled at maturity in a forward contract.

Question

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In a futures contract, changes in the underlying spot rate of exchange are settled daily through a process called marking-to-market. This means that the gains or losses incurred from the change in the spot rate are settled on a daily basis. On the other hand, in a forward contract, the settlement takes place only at maturity, which means that the gains or losses are settled at the end of the contract term.

Changes in the Underlying Spot Rate of Exchange Are Settled