A key characteristic of futures contracts that recommends their use over forwards contracts is:
A) futures are traded on exchanges and marked-to-market.
B) futures contracts allow flexibility in delivery dates.
C) futures are traded in liquid markets and allow netting of positions.
D) all of the given answers.

Question

Quizplus · Accepted Answer

All of the given answers are key characteristics of futures contracts that make them more favorable than forwards contracts. Futures contracts are traded on exchanges and marked-to-market, which provides transparency and reduces counterparty risk. Futures contracts also allow flexibility in delivery dates, and they are traded in liquid markets, allowing for easy netting of positions.

A Key Characteristic of Futures Contracts That Recommends Their Use