Which of the Following Is the Major Difference Between Forward

question 6

Multiple Choice

Which of the following is the major difference between forward and futures contracts?

• A) Futures contracts are more expensive than forward contracts.
• B) Forward contracts are available only for foreign currencies.
• C) Futures contracts are always delivered.
• D) Forward contracts are not marked to market.

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Definitions:

Investment

The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

Compound Interest

Interest calculated on a loan or deposit, taking into account the original principal as well as the interest that has accumulated in past periods.

Initial Deposit

The first payment made as part of a larger sum, often required to secure a purchase or open a financial account.

Transactions Costs

The expenses beyond the price of the product that buyers and sellers incur when making a transaction, such as fees, taxes, or other expenses.