Question

Forward contracts a. have a high liquidity risk related to immediate cash access to pay for possible losses. b. are less standardized than futures contracts. c. can never be arranged in the over-the-counter market. d. are never marked-to-market. e. cannot be customized to meet the hedging needs of the buyer.

Answer 1

b. are less standardized than futures contracts.

Step-by-step explanation:

• A forward contract is a simple non standardized contract between the two parties that have to buy or sell the asset at a specific time in the future at the price that is agreed on and this is called the long and short term position.

• They have closely related the future contracts but differ in certain aspects as they are not traded or defined or standardized assets But however are treaded over the market and over the counter i.e OTC and market to market daily calls.