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OTHER FUTURES CONTRACT

Discuss OTHER FUTURES CONTRACT within the Financial Management ( FM ) forums, part of the Resolve Your Query - Get Help and discuss Projects category; STOCK INDEX FUTURES Stock index futures are drawn on stock market indices and each of these contracts are characterized by ...

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Sunanda K. Chavan
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OTHER FUTURES CONTRACT - October 8th, 2010

STOCK INDEX FUTURES

Stock index futures are drawn on stock market indices and each of these contracts are characterized by payment of cash on the delivery date of an amount equal to a multiplier times the difference between:
a) The value of the index at the close of the last trading day of the contract, and
b) The purchase price of the futures contract.


INTEREST RATES FUTURES

Futures written on fixed income instruments as the underlying securities are known as interest rate futures. Predetermined periodical income through the life of such instruments and principle maturity amount at the end of the instrument’s life are the usually the features of such securities. These instruments have become an integral part of all balance portfolios and accordingly the growth of these securities has grown substantially. But ever since, interest rates on fixed income instruments have become highly volatile, the need for suitable hedge against this volatility has risen.

Thus, two prime-movers for the growth of interest rate futures are:
1. the tremendous growth in the fixed income securities, and
2. increased volatility in the interest rates in the market.

In order to hedge against the risks arising as a result of these two factors, interest rate futures come in handy apart from other hedging instruments like interest-rates swaps. Interest rate futures can be used to hedge against interest rate risk and to crystallize future investment yields or future cost of borrowing.
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Rose Marry
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Re: OTHER FUTURES CONTRACT - April 15th, 2016

Quote:
Originally Posted by sunandaC View Post
STOCK INDEX FUTURES

Stock index futures are drawn on stock market indices and each of these contracts are characterized by payment of cash on the delivery date of an amount equal to a multiplier times the difference between:
a) The value of the index at the close of the last trading day of the contract, and
b) The purchase price of the futures contract.


INTEREST RATES FUTURES

Futures written on fixed income instruments as the underlying securities are known as interest rate futures. Predetermined periodical income through the life of such instruments and principle maturity amount at the end of the instrumentís life are the usually the features of such securities. These instruments have become an integral part of all balance portfolios and accordingly the growth of these securities has grown substantially. But ever since, interest rates on fixed income instruments have become highly volatile, the need for suitable hedge against this volatility has risen.

Thus, two prime-movers for the growth of interest rate futures are:
1. the tremendous growth in the fixed income securities, and
2. increased volatility in the interest rates in the market.

In order to hedge against the risks arising as a result of these two factors, interest rate futures come in handy apart from other hedging instruments like interest-rates swaps. Interest rate futures can be used to hedge against interest rate risk and to crystallize future investment yields or future cost of borrowing.
Hey sunanda,

Here I am up-loading Notes on Forwards and Futures, please check attachment below.
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File Type: pdf Notes on Forwards and Futures.pdf (127.9 KB, 0 views)
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