Differences between forward contract and futures contract?
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Answer Posted / hunish singla
1) Forward contract are non-standardized as compared to future contract.
2) There remains a problem of liquidity in forward contract but in the case of future contract, no such issue exists.
3) Forward contract are not traded on the stock exchange but the future contract are traded on stock exchange even the lot size, quality, delivery time etc are perfectly described in future contract.
4) Default risk prevails in the forward market because the counter party can default at any time but there is no risk in future market.
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