A Major Difference Between a Forward and a Futures Contract

question 40

Multiple Choice

A major difference between a forward and a futures contract:

• A)is the forward has less credit risk than a futures contract
• B)is the forward contract is tailor-made to fit the needs of the buyer
• C)is the forward contract is marked to market more frequently than a futures contract
• D)is the forward contract rarely has final delivery of the asset

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Definitions:

Minimizes Cost

The process or strategy of reducing expenses to the lowest possible level.

Labor Intensive

A production process or industry that requires a large amount of labor input compared to capital input.

Alternative Technologies

Alternative technologies refer to new or substitute technological solutions that differ from existing methods, often offering improvements in efficiency or sustainability.

Capital Intensive

Describes industries or businesses that require large amounts of capital investments like equipment and machinery relative to labor.