Differences between forward and future contracts.

Question

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Answer 1

Question

Chapter 23, Problem 1DYU

Summary Introduction

To discuss: Differences between forward and future contracts.

Expert Solution & Answer

Explanation of Solution

The major differences between future contract and forward contracts are as follows,

Future contracts are traded with fixed maturities in open markets in standardized form, whereas forwards are two counterparty bilateral agreements. These can therefore customize to the needs of customer.
Future contracts are listed on the market every day while there are no forward contracts. The default risk for the latter is higher.
Futures are rarely delivered. Rather, before maturity, they are closed (reversed). Delivery normally occurs in most forward contracts.

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Answer 2

Question

Chapter 23, Problem 1DYU

Summary Introduction

To discuss: Differences between forward and future contracts.

Expert Solution & Answer

Explanation of Solution

The major differences between future contract and forward contracts are as follows,

Future contracts are traded with fixed maturities in open markets in standardized form, whereas forwards are two counterparty bilateral agreements. These can therefore customize to the needs of customer.
Future contracts are listed on the market every day while there are no forward contracts. The default risk for the latter is higher.
Futures are rarely delivered. Rather, before maturity, they are closed (reversed). Delivery normally occurs in most forward contracts.

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Answer 3

Question

Chapter 23, Problem 1DYU

Summary Introduction

To discuss: Differences between forward and future contracts.

Expert Solution & Answer

Explanation of Solution

The major differences between future contract and forward contracts are as follows,

Future contracts are traded with fixed maturities in open markets in standardized form, whereas forwards are two counterparty bilateral agreements. These can therefore customize to the needs of customer.
Future contracts are listed on the market every day while there are no forward contracts. The default risk for the latter is higher.
Futures are rarely delivered. Rather, before maturity, they are closed (reversed). Delivery normally occurs in most forward contracts.

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Answer 4

Question

Chapter 23, Problem 1DYU

Summary Introduction

To discuss: Differences between forward and future contracts.

Expert Solution & Answer

Explanation of Solution

The major differences between future contract and forward contracts are as follows,

Future contracts are traded with fixed maturities in open markets in standardized form, whereas forwards are two counterparty bilateral agreements. These can therefore customize to the needs of customer.
Future contracts are listed on the market every day while there are no forward contracts. The default risk for the latter is higher.
Futures are rarely delivered. Rather, before maturity, they are closed (reversed). Delivery normally occurs in most forward contracts.

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Answer 5

Chapter 23, Problem 1DYU

Summary Introduction

To discuss: Differences between forward and future contracts.

Expert Solution & Answer

Explanation of Solution

The major differences between future contract and forward contracts are as follows,

Future contracts are traded with fixed maturities in open markets in standardized form, whereas forwards are two counterparty bilateral agreements. These can therefore customize to the needs of customer.
Future contracts are listed on the market every day while there are no forward contracts. The default risk for the latter is higher.
Futures are rarely delivered. Rather, before maturity, they are closed (reversed). Delivery normally occurs in most forward contracts.

Answer 6

Chapter 23, Problem 1DYU

Summary Introduction

To discuss: Differences between forward and future contracts.

Expert Solution & Answer

Explanation of Solution

The major differences between future contract and forward contracts are as follows,

Future contracts are traded with fixed maturities in open markets in standardized form, whereas forwards are two counterparty bilateral agreements. These can therefore customize to the needs of customer.
Future contracts are listed on the market every day while there are no forward contracts. The default risk for the latter is higher.
Futures are rarely delivered. Rather, before maturity, they are closed (reversed). Delivery normally occurs in most forward contracts.

Answer 7

Chapter 23, Problem 1DYU

Summary Introduction

To discuss: Differences between forward and future contracts.

Answer 8

Expert Solution & Answer

Explanation of Solution

The major differences between future contract and forward contracts are as follows,

Future contracts are traded with fixed maturities in open markets in standardized form, whereas forwards are two counterparty bilateral agreements. These can therefore customize to the needs of customer.
Future contracts are listed on the market every day while there are no forward contracts. The default risk for the latter is higher.
Futures are rarely delivered. Rather, before maturity, they are closed (reversed). Delivery normally occurs in most forward contracts.