QUESTION 7

Which one of the followings is incorrect in the comparisons of Forwards with Futures.

a- Both contracts are binding (i.e., both parties must fulfill their obligations).

b- Forward contracts are less standardized then Futures that are traded on exchanges

c- There is usually no cost in signing Forwards but Futures involves maintenance (or margin) requirements.

d- Parties expose to more costs of default risk in Futures than Forwards.

e- Transaction details such as exercise price, maturity date are determined today for both Forwards and Futures.