Question: Q1. (a) Futures differ from forward contracts. Explain the key differences between them in terms of (i) credit risk, (ii) liquidity risk and (iii) maturity

Q1.

(a) Futures differ from forward contracts. Explain the key differences between them in terms of (i) credit risk, (ii) liquidity risk and (iii) maturity profile.

(b) Analyse the pros and cons of using forward contracts versus futures contracts for hedging purposes.

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