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) marked to market daily.

Question

Quizplus · Accepted Answer

Futures contracts are marked to market daily, meaning that the difference between the initial contract price and the current market price is settled daily. This requires daily cash flows and allows for more liquidity, which is a key difference from forwards contracts. Futures contracts can be used for hedging purposes and are used in both financial and foreign exchange markets, but these characteristics are not unique to futures and are also present in forwards contracts.

Futures Differ from Forwards Because They Are