Investments, tenth edition

22.6 

     1.   Forward contracts call for future delivery of an asset at a currently agreed-on price. The long 

trader purchases the good, and the short trader delivers it. If the price of the asset at the maturity 

of the contract exceeds the forward price, the long side benefits by virtue of acquiring the good at 

the contract price.  

    2.   A futures contract is similar to a forward contract, differing most importantly in the aspects of 

standardization and marking to market, which is the process by which gains and losses on futures 

contract positions are settled daily. In contrast, forward contracts call for no cash transfers until 

contract maturity.