Financial derivatives: Forwards and Futures

A derivative instrument is a contract which specifies the conditions under which a transaction will take place in the future. The price of the derivative depends on the price of another asset called as the underlying asset. Such assets could be index, stocks, bonds, commodities, exchange rates etc. In another article, we discussed one such derivative called options. Here we discuss forwards and futures, which have relatively simpler structures than options but still wide-prospects.

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