The major difference between valuing futures versus forward contracts stems from the fact that future contracts are: 1. traded on an exchange. 2. backed by a clearinghouse. 3. marked-to-market daily. 4. less risky. 5. relatively inflexible. Is this marked to market or traded on an exchange??
Added by John W.
Step 1
One of the options is "traded on exchange." This is true for futures contracts, as they are traded on organized exchanges such as the Chicago Mercantile Exchange (CME) or the New York Mercantile Exchange (NYMEX). Another option is "backed by a clearinghouse." Show more…
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