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Describe futures contracts and forward contracts and list two differences between them. (10 points) Futures contracts: Forward contracts: Difference: Difference:

User Crazyshezy
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Answer:

See Explanation Below

Explanation:

The concept of forward contract is such that it is a form of accordance that exist between two parties (rhey buyer and seller) on a particular transaction which is to be carried out or executed at a later or future date.

While

The concept of futures contract is such a contract that exist between two parties where both parties agree to buy and sell a particular asset of specific quantity and at a predetermined price, at a specified date in future.

The differences between them are

1. Futures contracts are of high standard whereas the terms of each forward contract can be negotiated.

2 Futures are traded on an exchange whereas forwards are traded over-the-counter.

User Petr Broz
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