Multiple choice general knowledge

Futures contracts are:

  1. the same as forward contracts.

  2. standardized contracts to make or take delivery of a commodity at a predetermined place and time.

  3. contracts with standardized price terms.

  4. all of the above.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Futures contracts are standardized agreements traded on exchanges, unlike forward contracts which are customized bilateral agreements. The standardization covers quality, quantity, delivery time, and location, making them fungible and tradable. Forward contracts are similar but are privately negotiated and not standardized.

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