The main difference between forward and future contracts is that the _____.

Question

Quizplus · Accepted Answer

The profit or loss on future contracts is settled on a daily basis, whereas in forward contracts, the settlement takes place at the end of the contract period. This difference can have an impact on the management of risk and the cost of carrying the contract. The other options are not correct as forward contracts can be customized and traded over-the-counter, and the default risk may vary depending on the counterparty involved in the trade.

The Main Difference Between Forward and Future Contracts Is That