Futures differ from forwards because they are
A) used to hedge portfolios.
B) used to hedge individual securities.
C) used in both financial and foreign exchange markets.
D) standardized contracts.

Question

Quizplus · Accepted Answer

Futures contracts are standardized agreements to buy or sell an asset at a predetermined price and date in the future. This is in contrast to forwards, which are customized agreements between two parties to buy or sell an underlying asset at a specific price and date in the future. Futures contracts are traded on exchanges, making them highly liquid and more accessible to retail investors compared to forwards.

Futures Differ from Forwards Because They Are