What is the difference between a forward and a futures contract?
- A Futures are exchange-traded, standardised and marked to market daily; forwards are bespoke and over the counter
- B Forwards are exchange traded
- C Futures carry higher counterparty risk
- D They are identical
Answer
Futures are exchange-traded, standardised and marked to market daily; forwards are bespoke and over the counter
Daily settlement and a clearing house substantially reduce counterparty risk in futures compared with forwards.
Log in with Google
Log in with LinkedIn
.jpg)
.jpg)
