Which of the following features distinguish futures markets from forwards markets?
A) Standardization of contracts.
B) The use of margin accounts to manage risk.
C) Ease in reversing positions.
D) All of the above.

Question

Quizplus · Accepted Answer

Futures markets differ from forwards markets in all three of the listed features. Futures contracts are standardized, whereas forwards are customized to meet the specific needs of the parties involved. Futures also utilize margin accounts to manage risk, which are not typically involved in forwards. Finally, futures enable easy reversal of positions through offsetting trades, while forwards are more difficult to unwind.

Which of the Following Features Distinguish Futures Markets from Forwards