A futures contract is similar to a forward contract except that
A) It calls for the price to determined at a later date
B) It calls for delivery of the commodity today
C) It sets a future date for delivery as compared to today's delivery under a forward contract
D) It can be arranged by any two parties on an informal basis
E) It is managed through an organized futures exchange

Question

Quizplus · Accepted Answer

A futures contract sets a future date for delivery, like a forward contract. However, it is managed through an organized futures exchange, unlike a forward contract which is arranged between two parties on an informal basis. Additionally, the price for a futures contract is determined through the exchange at the time the contract is entered into. Therefore, options A, B, C, and D are incorrect.

A Futures Contract Is Similar to a Forward Contract Except