Would you rather own a futures contract or a forward contract on pork bellies?© BrainMass Inc. brainmass.com October 10, 2019, 4:51 am ad1c9bdddf
If given the choice between owning a futures or a forward contract on pork bellies, I would prefer to have the futures contract. Both types of contracts have risks involved. I could make or gain money with either one. However, unlike the forward contract, the futures contract is marked to market on a daily basis which eliminates most counter-party risk. What that means is that ...
This solution discusses futures and forwards.