The main difference between a forward contract and a futures contract is that the contract price changes hands at the initiation of the contract with forward contracts but at maturity with futures.

Question

Carolyn Englander · Accepted Answer

Final Answer : False, Explanation :  The main difference is that forward contracts are private, over-the-counter agreements between two parties, and their terms are customizable, including when the contract price changes hands, which is typically at maturity, not at initiation. Futures contracts are standardized and traded on exchanges, with the contract price (margin requirements) potentially changing hands daily due to market variations, but the full contract value typically exchanges at maturity.

The main difference between a forward contract and a futures contract is that the contract price changes hands at the initiation of the contract with forward contracts but at maturity with futures.

Definitions

Learning Objectives

Learning Objectives

Related questions