A forward contract:
A)has more credit risk than a futures contract
B)is more standardised than a futures contract
C)is marked to market more frequently than a futures contract
D)has a shorter time to delivery than a futures contract
E)is less risky than a futures contract.

Question

Quizplus · Accepted Answer

A forward contract has more credit risk than a futures contract as it is a private agreement between two parties, whereas a futures contract is traded on an exchange and has the exchange as the counterparty, reducing credit risk.

A Forward Contract