What is a difference between a forward contract and a future contract?
A)The settlement price of a forward contract is fixed over the life of the contract but in a futures contract is marked to market daily.
B)Forward contracts are normally arranged through an organized exchange,while most futures contracts are OTC contracts.
C)Both are essentially the same,except for trading volumes which are higher for futures contracts.
D)Both are essentially the same,except for the fact that the terms of a forward contract is set by the exchange,subject to the approval of the Commodity Futures Trading Commission (CFTC).

Question

Quizplus · Accepted Answer

The key difference between a forward contract and a futures contract is the method of settlement. In a forward contract, the settlement price is fixed at the time of entering into the contract and remains the same throughout the life of the contract. In a futures contract, the settlement price is marked to market daily, meaning that gains and losses are settled at the end of each trading day.

What Is a Difference Between a Forward Contract and a Future