Define a Forward Contract and How It Differs from a Futures Contract.
A forward contract is a private agreement to buy or sell an asset at a specified future date and price. It is customized and traded over-the-counter (OTC).
A futures contract is a standardized agreement to do the same, but it is traded on an exchange. Futures contracts are subject to daily marking-to-market and are cleared by a clearing house, which reduces counterparty risk.
Forwards have higher counterparty risk.
