An advantage of a forward contract over a futures contract is that
A) the terms of the contract are flexible.
B) it is more liquid.
C) it trades through a centralized market exchange.
D) it is easier to unwind due to contract homogeneity.
E) the counterparty is anonymous.

Question

Quizplus · Accepted Answer

Forward contracts are customizable and can be tailored to the specific needs of the parties involved, while futures contracts are standardized and have limited flexibility. This makes forward contracts advantageous for parties with unique hedging or trading requirements.

An Advantage of a Forward Contract Over a Futures Contract