Futures differ from forward contracts because
A) Futures have more liquidity risk.
B) Futures have more credit risk.
C) Futures have more maturity risk.
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

Futures have standardized contracts and trade on organized exchanges, whereas forward contracts are individually tailored agreements between two parties. Therefore, futures have less liquidity risk, less credit risk, and less maturity risk compared to forward contracts.

Futures Differ from Forward Contracts Because