Question: What is a difference between a forward contract and a futures contract? The price of a forward contract is foxed over the life of the

What is a difference between a forward contract and a futures contract?
The price of a forward contract is foxed over the life of the contract but in a futures contract is marked to market daily
Forward contracts are nomally arranged through an organlzed exchange, while most futures contracts are Ore contracts
Both are essentially the same, except for trading volumes which are higher for futures contracts
Both are essentiatly the same, except for the fact that the terms of a forward contract is set by the exchange, subject to the approval of the CFTC.
Both a and c are true
What is a difference between a forward contract

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

7. A contract made on S&P futures requires the seller to provide what to the buyer on the settlement date? a. One share or fractional share of stocks in the index per contract for cash paid by the...

Q:

Please answer both! A home builder asked for your financial advice on the best method of hedging the price of lumber. He needs to purchase substantial amounts of lumber every year and wants to assure...

Q:

Which one of the following is a difference between a forward contract and a futures contract? A forward contract is a formal agreement while a futures contract is an informal agreement. There are no...

Q:

True, false or uncertain? Please explain your answers carefully and fully. No points will be rewarded for a true/false-only answer. 1. (5 points, Ch2Q1a) The duration of a bond maturing at date T is...

Q:

What is the six-month forward price for a stock providing no income. The stock price is 40 and the continuously compounded interest rate is 1.5%? What is the forward price if the stock pays a 1%,...

Q:

a. b. C. d. e. b. 30. As you know some companies do not pay any dividend. The value of a common stock such companies is calculated by the Trend analysis Cross-sectional analysis P/E method Gordon...

Q:

True, false or uncertain? Please explain your answers carefully and fully. No points will be rewarded for a true/false-only answer. 1. (5 points, Ch2Q1a) The duration of a bond maturing at date T is...

Q:

12. The difference between a forward contract and a futures contract is: Multiple Choice The fact that the futures contract does not obligate the buyer while the forward contract does. The fact that...

Q:

Question 31 (1 point) What is the basis? 1) The difference between a forward contract and a futures contract on the same asset 2) The difference between the futures price and the spot price of the...

Q:

The primary difference between a forward contract and a futures contract is the Select one: O a Time of delivery O b. Type of commodity being exchanged. O c. Time at which the price is determined. O...

Q:

a. Which types of capital expenditures incurred specifically for medical purposes are deductible? b. What limitations, if any, are imposed on the deductibility of these expenditures?

Q:

In a competitive marketing environment for consumer products, manufacturers are not allowed the luxury of raising selling prices to increase profits. This environment makes it difficult to increase...

Q:

What is a "short sale"? Selling securries that one does not yet own in the hope of purchasing them at a hipher price befone the delivery date is called a "Whort sale", it is a wolation of Section 1 6...

Q:

A particle is moving in three dimensions and its position vector is given by; r(t) = (4, 4t + 2, 3t)i + (4, 5t - 2, 3)2 + (3, 3t + 3, 1t)k where r is in meters and t is in seconds. Determine the...