A Forward Contract Differs from a Futures Contract in That

question 31

Multiple Choice

A forward contract differs from a futures contract in that:

• A)A forward contract calls for delivery on a specific date, whereas a futures contract permits the seller to decide later which specific day within the specified month will be the delivery date (if it gets as far as actual delivery before it is closed out).
• B)Unlike a futures contract, a forward contract usually is not traded on a market exchange.
• C)Unlike a futures contract, a forward contract does not call for a daily cash settlement for price changes in the underlying contract.Gains and losses on forward contracts are paid only when they are closed out.
• D)All of these are correct.