CAF-7 · Chapter 10 · Question 6 of 15
Which of the following best distinguishes a commodity futures contract from a commodity forward contract?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Futures have standardized contract sizes and terms, while forwards allow complete flexibility in quantity and dates
Explanation
Forwards are Over-The-Counter (OTC) private, highly customizable agreements. Futures are standardized, exchange-traded contracts with fixed lot sizes, strict maturity dates, and daily mark-to-market settlements.
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