Question

5. What are two differences between futures contracts and forward contracts ?

Answer 1

Futures contracts are highly standardized whereas the terms of each forward contract can be privately negotiated. Futures are traded on an exchange whereas forwards are traded over the counter

Answer 2

A forward contract is a private and customizable agreement that settles at the end of the agreement and is traded over-the-counter. A futures contract has standardized terms and is traded on an exchange, where prices are settled on a daily basis until the end of the contract.