A futures contract
A)is tailor-made to fit the needs of the buyer and the seller.
B)has more credit risk than a forward contract.
C)is marked to market more frequently than a forward contract.
D)has a shorter time to delivery than a forward contract.

Question

Quizplus · Accepted Answer

Futures contracts are marked to market daily, while forward contracts are settled at the end of the contract period. This makes futures contracts more liquid and allows for easier trading, but also creates more frequent credit risk for the parties involved. Choices A, B, and D are not accurate statements about futures contracts.

A Futures Contract