Comparing "forward" and "futures" exchange contracts,we can say that
A)they are both "marked-to-market" daily.
B)their major difference is in the way the underlying asset is priced for future purchase or sale: futures settle daily and forwards settle at maturity.
C)a futures contract is negotiated by open outcry between floor brokers or traders and is traded on organized exchanges,while forward contract is tailor-made by an international bank for its clients and is traded OTC.
D)their major difference is in the way the underlying asset is priced for future purchase or sale: futures settle daily and forwards settle at maturity,and a futures contract is negotiated by open outcry between floor brokers or traders and is traded on organized exchanges,while a forward contract is tailor-made by an international bank for its clients and is traded OTC.

Question

Quizplus · Accepted Answer

This answer correctly identifies the major difference between forward and futures contracts - how the underlying asset is priced for future purchase or sale - and also correctly identifies that futures contracts are traded on organized exchanges through open outcry trading, while forward contracts are tailor-made and traded over the counter (OTC). Additionally, both forwards and futures contracts are marked-to-market daily, so choice A is incorrect. Choice B is incorrect because it only partially identifies the difference between forwards and futures, and does not mention the trading differences. Choice C is incorrect because it describes only the differences in trading, and does not fully identify the difference in pricing of the underlying asset.

Comparing "Forward" and "Futures" Exchange Contracts,we Can Say That