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A forward contract differs from a futures contract primarily in that a forward is:
AOTC-negotiated and customised between parties
BExchange-traded and standardised by lot size
CMarked-to-market on a daily settlement basis
DCleared through a central counterparty house
Answer & Solution
Correct answer: A. OTC-negotiated and customised between parties
1. Identify what the question asks: this concept maps to forwardvsfuture (§2).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (A).
_Source: ICAI BoS CA Final Paper 2, Ch 9 "Derivatives Analysis and Valuation"_
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