The difference between forward contract and futures contract, the reason behind to treat futures contract as a common contract and the circumstances in which forward contract should be more preferable than futures contract. Forward contract: Forward contract refers to that contract in which the two parties are agreed today to make an exchange at a specified future date. Futures contract: Futures contract refers to a contract in which the two parties agree to trade any asset or commodity at the present price executable in future. In futures contract the delivery of product and payment activities would be execute in the near future.

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

Answer 1

Question

Chapter 25, Problem 3CQ

Summary Introduction

To explain: The difference between forward contract and futures contract, the reason behind to treat futures contract as a common contract and the circumstances in which forward contract should be more preferable than futures contract.

Forward contract:

Forward contract refers to that contract in which the two parties are agreed today to make an exchange at a specified future date.

Futures contract:

Futures contract refers to a contract in which the two parties agree to trade any asset or commodity at the present price executable in future. In futures contract the delivery of product and payment activities would be execute in the near future.

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

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Answer 2

Question

Chapter 25, Problem 3CQ

Summary Introduction

To explain: The difference between forward contract and futures contract, the reason behind to treat futures contract as a common contract and the circumstances in which forward contract should be more preferable than futures contract.

Forward contract:

Forward contract refers to that contract in which the two parties are agreed today to make an exchange at a specified future date.

Futures contract:

Futures contract refers to a contract in which the two parties agree to trade any asset or commodity at the present price executable in future. In futures contract the delivery of product and payment activities would be execute in the near future.

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Answer 3

Question

Chapter 25, Problem 3CQ

Summary Introduction

To explain: The difference between forward contract and futures contract, the reason behind to treat futures contract as a common contract and the circumstances in which forward contract should be more preferable than futures contract.

Forward contract:

Forward contract refers to that contract in which the two parties are agreed today to make an exchange at a specified future date.

Futures contract:

Futures contract refers to a contract in which the two parties agree to trade any asset or commodity at the present price executable in future. In futures contract the delivery of product and payment activities would be execute in the near future.

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Answer 4

Question

Chapter 25, Problem 3CQ

Summary Introduction

To explain: The difference between forward contract and futures contract, the reason behind to treat futures contract as a common contract and the circumstances in which forward contract should be more preferable than futures contract.

Forward contract:

Forward contract refers to that contract in which the two parties are agreed today to make an exchange at a specified future date.

Futures contract:

Futures contract refers to a contract in which the two parties agree to trade any asset or commodity at the present price executable in future. In futures contract the delivery of product and payment activities would be execute in the near future.

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Answer 5

Chapter 25, Problem 3CQ

Summary Introduction

To explain: The difference between forward contract and futures contract, the reason behind to treat futures contract as a common contract and the circumstances in which forward contract should be more preferable than futures contract.

Forward contract:

Forward contract refers to that contract in which the two parties are agreed today to make an exchange at a specified future date.

Futures contract:

Futures contract refers to a contract in which the two parties agree to trade any asset or commodity at the present price executable in future. In futures contract the delivery of product and payment activities would be execute in the near future.

Answer 6

Chapter 25, Problem 3CQ

Summary Introduction

To explain: The difference between forward contract and futures contract, the reason behind to treat futures contract as a common contract and the circumstances in which forward contract should be more preferable than futures contract.

Forward contract:

Forward contract refers to that contract in which the two parties are agreed today to make an exchange at a specified future date.

Futures contract:

Futures contract refers to a contract in which the two parties agree to trade any asset or commodity at the present price executable in future. In futures contract the delivery of product and payment activities would be execute in the near future.

Answer 7

Chapter 25, Problem 3CQ

Summary Introduction

To explain: The difference between forward contract and futures contract, the reason behind to treat futures contract as a common contract and the circumstances in which forward contract should be more preferable than futures contract.

Forward contract:

Forward contract refers to that contract in which the two parties are agreed today to make an exchange at a specified future date.

Futures contract:

Futures contract refers to a contract in which the two parties agree to trade any asset or commodity at the present price executable in future. In futures contract the delivery of product and payment activities would be execute in the near future.

Answer 8

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Answer 19

Ch. 25 - Prob. 1CQ Ch. 25 - Prob. 2CQ Ch. 25 - Prob. 3CQ Ch. 25 - Prob. 4CQ Ch. 25 - Prob. 5CQ Ch. 25 - Prob. 6CQ Ch. 25 - Option Explain why a put option on a bond is...Ch. 25 - Hedging Interest Rates A company has a large bond...Ch. 25 - Prob. 9CQ Ch. 25 - Prob. 10CQ

Solution Summary: The author explains the difference between forward contract and futures contract. Forward contracts are customized contracts and are used for hedging and speculation.

Chapter 25 Solutions