Which of the following statements correctly describes a future contract?

A futures contract is a standardized agreement to buy or sell a specific quantity of a commodity or financial instrument at a predetermined price at a specified time in the future. This type of contract is indeed characterized by its trading on financial exchanges, which distinguishes it from forward contracts that are typically private agreements between parties. The exchange-traded nature of futures contracts provides liquidity and price transparency, allowing for greater market participation and easier entry and exit from positions.

The option describing futures as expiring in less than a week does not accurately reflect the nature of these contracts, as they can have various expiration dates, often spanning several months or longer. The idea that futures are designed exclusively for small transactions is misleading, as they can be used for dealing with large quantities of assets, making them suitable for both hedgers and speculators. Lastly, the comparison to options is not valid, as futures contracts necessitate the obligation to buy or sell at the contract's expiration, whereas options provide the right but not the obligation to execute the purchase or sale at a later time. This key difference further highlights why the correct answer emphasizes their nature as forward contracts exchanged on financial platforms.