Question

Which of the following features distinguish futures markets from forwards markets?  (Choose ALL the correct answer(s) that apply)

		Standardization
		Use of Margin account to trade
		Easy to get in and get out of positions
		The futures have no expiration date

Answer 1

The following features distinguish futures market from forwards markets-

Standardization

Use of margin account to trade

Easy to get in and get out of positions

Futures are standardized forward contracts. They are similar to forward contracts but have a fixed quantity and quality and date of expiration. Futures use margin accounts to trade. Also, you can settle your position anytime by taking an opposite position of the same quantity and expiry in the futures market.

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