The difference between the cash market and the futures market is:

Question

Quizplus · Accepted Answer

The main difference between the cash market and futures market is that in the cash market, there is a transfer of physical possession of the goods, while in the futures market, there is no physical delivery of the underlying asset. Instead, futures contracts are settled in cash. Option A is incorrect as commodity prices can be negotiated in the futures market. Option B is incorrect as margin requirements are typically higher in the futures market. Option D is incorrect as the price of commodities in the futures market is determined by supply and demand, just like in the cash market.

The Difference Between the Cash Market and the Futures Market