CMSA Practice Questions - Capital Markets & Securities Analyst Exam

What is the primary difference between a futures contract and a forward contract?

Futures are exchange-traded and standardized, while forwards are over-the-counter and customized Forwards are exchange-traded and standardized, while futures are over-the-counter Futures require no margin, while forwards require daily margin payments Forwards have no counterparty risk, while futures carry significant default risk

Correct Answer:

Futures are exchange-traded and standardized, while forwards are over-the-counter and customized

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