Which of the following is not correct concerning forward contracts? Forward contracts:
A)Are not standardized
B)Do not set the price until the end of the contract
C)Are not traded on organized exchanges
D)Are not marked to market daily

Question

Quizplus · Accepted Answer

Forward contracts are typically customized agreements between two parties to buy or sell an asset at a specified price on a future date. The price is agreed upon at the time the contract is entered into, not at the end of the contract (as stated in option B). The other options are correct: forward contracts are not standardized like futures contracts, they are not traded on organized exchanges, and they are not marked to market daily.

Which of the Following Is Not Correct Concerning Forward Contracts