A difference between forward and futures contracts is that ?
Correct answer: C. forward contracts can be tailored in amount and delivery date to the need of importers of exporters
- A. forward contracts occur in a specific locations-for example, the Chicago Mercantile Exchange
- B. futures contracts have negotiable delivery dates
- C. forward contracts can be tailored in amount and delivery date to the need of importers of exporters
- D. futures contracts involve no brokerage fees or other transactions costs
Explanation
Forward contracts are privately negotiated and can be customised for the amount and delivery date required by an importer or exporter. Futures contracts are standardised and traded on organised exchanges, making option c the valid distinction.
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