Futures contracts contrast with forward contracts by:
A)trading on an organized exchange.
B)marking to the market on a daily basis.
C)allowing the seller to deliver any day over the delivery month.
D)the clearing house who guarantee the transaction to lower the probability of default.
E)All of the above.

Question

Quizplus · Accepted Answer

All of the above statements are true for futures contracts compared to forward contracts. Futures contracts trade on an organized exchange and are marked to the market daily. This means that gains and losses are settled every day, reducing the risk of default. Additionally, futures contracts typically allow delivery on any day over the delivery month. Finally, futures contracts are guaranteed by a clearinghouse, which adds an extra layer of security to the transaction.

Futures Contracts Contrast with Forward Contracts By