Compared with a forward contract, a futures contract ________.
A)is more flexible
B)is normally available through commercial banks
C)does not guarantee a future exchange rate
D)is only traded on an exchange

Question

Quizplus · Accepted Answer

Futures contracts are only traded on exchanges, whereas forward contracts can be arranged between two parties without the involvement of an exchange. Futures contracts are standardized and therefore less flexible than forward contracts, which can be structured to meet the needs of the parties involved. Both futures and forward contracts do not guarantee future exchange rates. Commercial banks may offer both types of contracts, but this is not exclusive to futures contracts.

Compared with a Forward Contract, a Futures Contract ________