Canadian Securities Course (CSC) Level 1 Test 2025 – 400 Free Practice Questions to Pass the Exam

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What is the difference between a forward and a future?

They are interchangeable terms

Forward is only for commodities, futures for stocks

Forward is OTC, futures are traded on exchanges

The correct answer is C. Forward contracts are traded over-the-counter (OTC), meaning they are customizable contracts between two parties. On the other hand, futures contracts are standardized and traded on exchanges, providing more liquidity and transparency due to their centralized clearing. This distinction between OTC trading for forwards and exchange-trading for futures is a key differentiating factor between the two types of contracts.

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Future is only for currencies, forward for stocks

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