Question

What is the key difference between Futures and Forwards regarding fulfillment of the contract on the delivery date?

a.

Both parties of a futures contract must fulfill the contract on the delivery date, unlike a forward contract.

b.

Only the buyer in a futures contract must fulfill the contract on the delivery date, unlike a forward contract.

c.

Only the seller in a futures contract must fulfill the contract on the delivery date, unlike a forward contract.

d.

Unlike a forward contract, both parties of a futures contract do not need to fulfill the contract on the delivery date.

Posted under IC 89 Management Accounting

Answer: (a).Both parties of a futures contract must fulfill the contract on the delivery date, unlike a forward contract. Explanation:In a futures contract, both parties must fulfill the contract on the delivery date, unlike a forward contract where the fulfillment is based on mutual agreement.

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