A Futures Contract Is a Forward Contract with Some Important

question 83

Essay

A futures contract is a forward contract with some important differences.Explain.
A futures contract is a forward contract that has been standardized and which is sold through an organized exchange.Forward contracts generally are private agreements between two parties and as a result are customized and therefore difficult to sell.

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Definitions:

Notice

A formal or informal communication or indication that informs a party of a fact, decision, or legal process, which may have implications for rights or duties.

Advance

Money paid or received before it is due, often used in contexts like salary advances or advance payments.

Periodic Tenancy

A tenancy agreement that automatically renews for a fixed period, such as monthly or yearly, until notice is given to terminate it.

Tenancy from Month to Month

A rental agreement where the lease period is for one month, automatically renewing each month until either the landlord or tenant decides to terminate it.