8. Foreign currency futures contracts differ from forward contracts in the follo

Question

8. Foreign currency futures contracts differ from forward contracts in the following important ways EXCEPT: (a) Futures are standardized in terms of size while forwards can be customized (b) Futures have no fixed maturities while forwards can have any maturity (c) Trading on futures occurs on organized exchanges while forwards are traded between individuals and banks (d) Futures have an initial margin that is market to market on a daily basis while only a bank relationship is needed for a forward 2

Explanation / Answer

The options (B) is correct.

Futures does have maturity for a month or two or three, and at the end of each expiry a trader can rollover its current position to the next expiry, if the postion went against the current futures price. Whereas, foreward's maturity can be decided over the counter since it is not being regulated by exchange.

Related Questions

Navigate

• Browse (All)
• Browse 8
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.