What is a FUTURES CONTRACT and what are its key components?

Q: What is the Futures and Options Market? What are the features? Provide information about the Futures…

A: Futures contract is a legal contract which is standardized in nature. The contract is used by market…

Q: What is foreign exchange FX risk?

A: Foreign exchange risk: It alludes to the misfortunes, due to currency or money changes, that a…

Q: What is a FUTURES CONTRACT and what are its key components

A: Derivatives are those securities, the value of which depends on another security. There are few…

Q: Distinguish between (2) spot and futures markets

A: A financial market is the market where financial assets are created and traded. Financial assets are…

Q: What are the main differences between options and warrant contracts and forward and futures…

A: The difference among options and warrant contract:

Q: How can derivative security be used to hedge portfolio risk?

A: A derivative is depicted as an investment procedure outlined to assist the financial specialist to…

Q: What is basis risk in relation to futures contract hegding?

A: Basis Risk:Basis risk is a financial risk which arises from the incompatibility in the positions of…

Q: What is the difference between forward and futures contracts, focusing on the pros and cons of each

A: In certain ways future and forward deals are similar: both include the buying and selling of assets…

Q: Explain in detail the pricing applications of commodity derivatives.

A: Commodity Derivatives are the financial instruments which are traded on commodity as underlying…

Q: .How can options, futures, and forward contracts be used to devise simple hedging strategies?…

A: Options, futures and forwards are derivative contracts that can be used to hedge the underlying…

Q: What is the spread (i.e., difference) between futures price and spot price called? a) Convergence…

A: The futures price is an estimated price the investor expected in the future.  The spot price is a…

Q: Why is marking to market important? Examine the significance of market index futures in an economy…

A: Market index futures are financial derivatives that allow investors to trade contracts based on the…

Q: How to analysis the forex market

A: Introduction: Forex market-It is a place where banks, investment management firms, hedge funds,…

Q: Define alternative trading system (ATS)

A: An alternative trading system (ATS) is not an exchange-regulated, yet a position that suits its…

Q: What is a normal market for futures? What does an inverted futures curve indicate?

A: The future refers to the legal agreement between the buyer and the seller to exchange underlying…

Q: What advantage does hedging using money market rates have over using interest rate futures?

A: However, there are also some drawbacks to consider:Potential Lower Returns: Interest earned on money…

Q: What is the key difference between futures contracts and options?

A: Both futures contracts and options are derivative instruments. Their value depends on the value of…

Q: Suppose a company knows the quantity of a commodity that it willproduce. Describe how it might hedge…

A: Introduction: Hedging is one form of investment in the concept of risk management system. It is an…

Q: are broker markets and dealer markets? Distinguish between these

A: Broker market and dealer market are two different methods of trading in stock market.

Q: Describe the difference between the forward price and the value of a forward contract?

A: First, let us define a forward contract. Forward contracts are agreements between two parties to buy…

Q: What is a futures contract? What are the key differences between forward andfutures contracts?

A: Futures Contract are the Promises made between two parties on the platform called exchange for the…

Q: What is Eurodollar futures? Why and when will a company use Eurodollar futures?

A: We need to explain Eurodollar futures and why and when they are used.

Q: What is margin requirement (for futures)?

A: Solution:- A Margin Requirement is the share of marginable securities that an investor should pay…

Q: Differentiate between the following types of markets: physical asset vs. financial markets, spot vs.…

A: Note : As per the guidelines, only first three parts will be answered.

Q: hat are broker markets? What are dealer ow do they differ?

A: Introduction: In the trade market, there are several types of the market associated with it. Two of…

Q: What is a futures contract?

A: Derivatives: Derivatives are some financial instruments which are meant for managing risk and…

Q: Explain the Use of Derivatives to Hedge Portfolio Risk?

A: The contract whose value derives from the fluctuation of values of the underlying assets is called…

Q: How do forwards, futures, and swaps hedge risk?

A: A forward contract may be a personalized contract between 2 parties purchasing or offering an asset…

Q: Address the similarity and differences between option and forward/futures contracts.

A: An option contract is referred to as the promise, which used to meet the requirements regarding the…

Q: Explain why futures contracts may mitigate the credit risk involved in forward contracts.

A: Forward and future contracts are two types of risk management and hedging strategies.

Q: How does a futures contract differ from a forward contract?

A: Derivatives: A derivative is defined as a financial instrument whose value is derived from the value…

Q: What is the main purpose of a hedging strategy using a forward contract or a futures contract?…

A: Hedging-It is a risk management strategy undertaken by individuals, investors, corporates to offset…

Q: Briefly discuss the relative advantages and disadvantages of an exchange-traded futures contract…

A: Futures contract is referred to as the legal agreement for purchase or sell of the specified or…

Q: Financial Futures Markets: Explain how sellers of financial futures contracts can offset their…

A: Financial futures contract:A financial futures contract is a type of agreement between two parties…

Q: Forwards and Futures: How are forwards and futures similar? How are they different? Briefly explain…

A: A forward contract is referred to the customized contract, which is between the two parties for…

Q: What apparatus exists to facilitate purchases and sales of futures contracts?

A: The question is based on the concept of trading in future contract in derivative segment of stock…

Q: Define each of the following terms: c. Financial futures; forward contract

A: Financial futures can also be called as futures helps in trading of non physical assets either for…