Question

What are the differences between forward market and future market?

What are the differences between forward market and future market?

Homework Answers

Answer #1

Forward markets involve transaction between two parties with a private contract, whereas, future markets involve transactions that are traded on Stock exchange.

Unlike Forward markets, future markets are standardized and regulated.

Transactions in the future contract are settled daily whereas they are settled at the end of the contract in the forward market.

Forward transactions are done over the counter (OTC) whereas future contract transactions are done through exchange only.

Transactions in future market are less costly as compared to forward market.

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