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Which of the following statements is (are) correct? More than one answer is possible. a. Futures...

Which of the following statements is (are) correct? More than one answer is possible.

a. Futures contract are marked to market daily.

b. Forward contracts are default free

c. Goods rarely are delivered on futures contract.

d. Futures contract don't have any margin requirements.

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Answer #1

a. Futures contract are marked to market daily- Correct. Contracts are marked to market and profit or loss is calculated on a daily basis.

b. Forward contracts are default free-Incorrect. Since forward contracts are private agreements, there is a risk of default

c. Goods rarely are delivered on futures contract.-Correct- Goods are not delivered in a futures contract. Profit or loss is adjusted from the margin account.

d. Futures contract don't have any margin requirements.-Incorrect- Futures contracts have margin requirements. There are various kinds of margin such as initial margin, maintenance margin and variation margin

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