In which of the following ways do futures contracts differ f

In which of the following ways do futures contracts differ from forward contracts?

1. Futures contracts are standardized.

2. For futures, performance of each party is guaranteed by a clearinghouse.

3. Futures contracts require a daily settling of any gains or losses.

Select one:

a. 1. and 3. only

b. 2. and 3. only

c. 1.,2., and 3.

d. 1. and 2. only

Solution

Correct option is > c. 1.,2., and 3.

Future contracts are standardized means they are not customized as forward, performance of each party is guaranteed by clearing house and margin calls are done if there is loss and account show excess if there is profit.