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:

Scientist

A professional who conducts scientific research to advance knowledge in an area of interest, often using the scientific method to test hypotheses and develop new understandings.

Entrapment

A psychological state or situation where an individual feels compelled to continue a course of action due to prior investment, despite the current costs outweighing the benefits.

Gradual Process

A slow and step-by-step progression or development of something over time.

Commitment

The state or quality of being dedicated to a cause, activity, or relationship.