The derivatives markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are some common types of derivatives contracts.

Based on your understanding of forward and futures contracts, identify the differences between the two:

	Forward Contracts	Futures Contracts
These are contracts under which one party agrees to buy or sell a commodity at a specific time in the future at a specified delivery price and the other party agrees to make the sale.
These contracts cannot be executed for any quantity. Each contract specifies the volume of the assets traded, including the necessary technical specifications of the asset.

True or False: The volume of trading conducted in contracts for interest rate and exchange rate futures is greater than the volume of trading occurring in commodity futures contracts.

True

False

Pirtucon Co., an American company, has purchased 4 million worth of equipment from a French company. Payment for the equipment is not due for six months. Pirtucon Co. does not want to give up the free-trade credit, but it also wants to make sure that the dollar cost of 4 million does not rise over the next six months. Which of the following actions would allow Pirtucon Co. to lock in the dollar cost of the equipment?

Take a long position in foreign exchange futures

Take a long position in interest rate futures

Take a short position in interest rate futures

Take a short position in foreign exchange futures