The Difference Between a Forward Contract and a Futures Contract

question 134

Multiple Choice

The difference between a forward contract and a futures contract is:

• A) The fact that the futures contract does not obligate the buyer while the forward contract does.
• B) The fact that a forward contract must be paid in full at the onset while the futures contract does not.
• C) The daily resettlement feature found in futures contracts but not in forward contracts.
• D) The fact that a futures contract is a form of an option contract and a forward contract is not.
• E) The fact that the forward contract is marked-to-the-market and the futures contract is not.

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Definitions:

Economic Enterprises

Organizations or businesses engaged in commercial, industrial, or professional activities with the aim of generating profits.

Racial Wealth Gap

The significant disparity in median wealth between different racial and ethnic groups in a society, often resulting from historical inequities and systemic racism.

Racialized Institution

An institution that embeds racial practices and policies within its operations, thereby perpetuating racial inequalities and hierarchies.

Physical Attributes

The observable physical characteristics of an individual, including height, body shape, skin color, hair, and facial features.