Futures Contracts Differ from Forward Contracts in All of the Following

question 40

Multiple Choice

Futures contracts differ from forward contracts in all of the following ways except:

• A) Forward contracts involve an intermediary or exchange.
• B) Futures contracts are standardized; forward contracts are not.
• C) Futures markets are more formal than forward markets.
• D) Delivery is made most often in forward contracts.

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Definitions:

Maturity Value

The amount that will be payable to the holder of a financial instrument at the date of its maturity; it includes the principal amount plus any accrued interest.

Interest

The cost of borrowing money or the return on investment, calculated as a percentage of the principal sum.

Percent of Sales Method

A forecasting technique that estimates future financial statements based on a predicted sales growth rate and historical financial ratios.

Analysis of Receivables

The process of examining the accounts receivable of a business to assess their collectability and manage credit risk.