Comparing "Forward" and "Futures" Exchange Contracts,we Can Say That

question 76

Multiple Choice

Comparing "forward" and "futures" exchange contracts,we can say that

• A)they are both "marked-to-market" daily.
• B)their major difference is in the way the underlying asset is priced for future purchase or sale: futures settle daily and forwards settle at maturity.
• C)a futures contract is negotiated by open outcry between floor brokers or traders and is traded on organized exchanges,while forward contract is tailor-made by an international bank for its clients and is traded OTC.
• D)their major difference is in the way the underlying asset is priced for future purchase or sale: futures settle daily and forwards settle at maturity,and a futures contract is negotiated by open outcry between floor brokers or traders and is traded on organized exchanges,while a forward contract is tailor-made by an international bank for its clients and is traded OTC.

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Definitions:

Annual Coupon Bond

A type of bond that pays interest to the bondholder on an annual basis.

Portfolio Value

The total worth of all the financial assets held in an investment portfolio, which can vary over time based on market conditions.

Horizon Analysis

A method used in finance to assess the suitability of investments over different timeframes.

Yield To Maturity

The total return anticipated on a bond if it is held until the date of its maturity, representing an important measure of the bond's potential profitability.