Economics · Derivatives
Which of the following statements correctly differentiates futures and forward contracts?
- 1Forward contracts are guaranteed by exchanges, while futures contracts are not.
- 2Both futures and forwards are traded on exchanges with standardized terms.
- 3Futures contracts are standardized, whereas forward contracts are customized.✓
- 4Futures contracts are traded over-the-counter, while forward contracts are exchange-traded.
Correct answer
Futures contracts are standardized, whereas forward contracts are customized.
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