Which of the following is a similarity between forwards and futures?
A)Both are traded in the over-the-counter market.
B)Both can be tailored to meet specific customer needs.
C)Both trade on an exchange with standardized contract specifications.
D)The prices for both derive from the spot, or cash market, which is "today's" price for a particular asset.
E)Both are agreements that give the right (but not the obligation) to buy or sell an underlying asset at a specified price at a specified time in the future.

Question

Quizplus · Accepted Answer

Forwards and futures prices both derive from the spot market, which is the current market price for the underlying asset. This is a fundamental principle of how these financial instruments are priced, reflecting their value based on the current or "spot" price of the asset they are derived from.

Which of the Following Is a Similarity Between Forwards and Futures