The Following Is Not a Point of Difference Between Futures

question 17

Multiple Choice

The following is not a point of difference between futures and forwards.

• A) The futures payoff depends on the spot price of the asset at contract maturity.
• B) Futures are traded on an exchange.
• C) Futures have standardized terms.
• D) Default risk in a futures contract is borne by the exchange.

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Definitions:

Standard Error

The standard deviation of the sampling distribution of a statistic, commonly used as an estimate of the accuracy of a sample mean.

Sample Mean

The average of observations collected from a sample, used as an estimate of the population mean.

Observations

Data points or individual pieces of data collected through measurement, study, or research.

Random Sample

A group of people selected from a broader population, where every person has the same probability of being chosen.