What is the difference between futures and forwards-02334
This subjective question is related to the book/course
vu mth718 Topics in Numerical Methods.
It can also be found in
vu mth718 Mid Term Solved Past Paper No. 5.
Question 1: What is the difference between futures and forwards?
Answer:
Forwards Futures
- Private contract between 2 parties Exchange traded
- Non-standard contract Standard contract
- Usually one specified delivery date Range of delivery dates
- Settled at end of contract Settled daily
- Delivery or final cash
- Settlement usually occurs
- Contract usually closed out
- Prior to maturity
- Some credit risk Virtually no credit risk
