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

Q: Explain the difference between a call option and a long position in a futures contract.

A: Both the options and futures are derivative contracts.

Q: a) Futures contracts and options on futures contracts can be used to modify risk. Required:Identify…

A: The derivatives are the contract which obtains its value from some underlying asset and earns return…

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

A: The difference among options and warrant contract:

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: What is the process that makes sure the market price of an underlying asset equals the price of a…

A: Futures contract is a derivative instrument in which the price of the underlying asset in fixed for…

Q: “Hedging is the basic function of futures market”. Discuss the statement in the light of uses of…

A: Hedging means constructing a fence around it. In financial markets hedging implies eliminating the…

Q: : A futures contract is used for hedging. Carefully explain why the daily settlement of the contract…

A: in future contracts large amount of buying and selling is done and trades are done some initial…

Q: Explain the main differences between futures contracts and forward contracts.

A: Solution- Future Contract-        A derivative may be a legal agreement to shop for or sell a…

Q: Discuss two similarities and two differences between a futures contract and a forward contract. When…

A: Future Contract: A futures contract is a legally binding agreement to purchase or sell a certain…

Q: Highlight the key difference between option, futures and forward contracts.

A: Option, futures and forwards are three examples of financial derivatives. Option gives traders the…

Q: What is a futures contract, and how are futuresused to manage risk? What are you protectingagainst…

A: Answer: Future contracts are an agreement to buy or sell anything on a specified future date. Two…

Q: Which is a key difference a manager should note in choosing between forward and futures contracts?…

A: a. Exchange trading occurs in the case of futures contracts. Therefore, futures contract are more…

Q: The major difference between futures and options arises from the different obligations of buyers…

A: In futures contract, both the buyer and seller of the contract are obligated to buy and sell the…

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: Explain what is meant by forward contracts and futures using examples. List the main advantages /…

A: An option offers the holder of it the right, and not the responsibility, to buy or to sell an asset…

Q: Futures contracts offer more flexible terms than a forward contract. True False

A: Futures and Forward contracts are contracts which allows to buy or sell an underlying asset at a…

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 a futures contract?

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

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: Compare and contrast the commitments taken on by the following:  A futures contract buyer versus a…

A: In a futures contractIt is a contract entered in which the buyer who agreed to buy the particular…

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: Explain the difference between a put option and a short position in a futures contract.

A: The question is based on the basic concept of derivatives contract, an investor can create different…

Q: Why might individuals purchase futures contracts rather than the underlying asset?

A: Futures are derivative contracts, the price movement of a derivative contract (like futures) is…

Q: What is a difference between Futures Contract and Forwards Contract?

A: Forward contract: This is an agreement between two parties to trade on a asset at a specified price…

Q: a) Futures contracts and options on futures contracts can be used to modify risk.Required:Identify…

A: Future contracts:  The future contracts are legal derivative contracts to buy or sell an underlying…

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: Discuss similarities and differences between futures contracts and forward contracts.

A: Under stock exchange, parties can have transactions through different types of contracts. Some…

Q: What is the difference between the futures price and the value of the futures contract?

A: Futures contracts are derivative instruments in which the participants agree to buy or sell an…

Q: Determine which of the following is NOT a distinguishing characteristic of futures contracts,…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: Which of the following is true?   A.Forward contract buyers and sellers do not know who the…

A: Forward and futures contracts are derivatives agreements in which two parties associate to acquire…

Q: Describe how the price of a futures contract is established in theory, with reference to arbitrage.

A: The concept of Future Price determination is simple:- Theoretical Future price is calculated based…