Futures contracts are similar to forward contracts in that they both
A) have volatile price movements and strong interest from buyers and sellers.
B) give the holder the option to make a transaction in the future.
C) have similar liquidity.
D) have similar credit risk.
E) trade on the same exchange.

Question

Quizplus · Accepted Answer

Both futures and forward contracts involve volatile price movements and attract strong interest from buyers and sellers due to their nature of allowing speculation and hedging on future price movements.

Futures Contracts Are Similar to Forward Contracts in That They