Question

Essay Questions (20 points each - Explain in detail) 1. What are the differences between futures and forward markets in terms
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Forwards:
1. Counterparty default risk exists.
2. It is customisable as per client needs.
3. most forward contracts are physically settled on maturity.
4. Less regulated.
5. Low liquidity.
6. There is no mark to market and generally, loss or gain is transferred at maturity.

Futures:
1. Counterparty default risk is not present.
2. Standardized contract terms.
3. Most future contracts are squared off prior to maturity. those that are not squared off are generally cash-settled on maturity.
4. Highly regulated due to broader market participation.
5. High liquidity.
6. There is a daily mark to market. It requires capital as per daily market conditions.

Add a comment
Know the answer?
Add Answer to:
Essay Questions (20 points each - Explain in detail) 1. What are the differences between futures...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • What are the differences between futures and forward markets in terms of counterparty credit risk (3pts),...

    What are the differences between futures and forward markets in terms of counterparty credit risk (3pts), contract terms (3pts), delivery expected (3pts), timing flexibility (3pts), regulation (3pts), liquidity requirements (3pts), and capital requirements (2pts)?

  • i need help with #5 Favorites say Questions (20 points each - Explain in detail) What...

    i need help with #5 Favorites say Questions (20 points each - Explain in detail) What are the differences between futures and forward markets in terms of counterparty credit risk (3pts). contract delivery expected (3pts), timing flexibility (3pts), regulation (3pts), liquidity requirements (3pts), and capital requirem Explain in details. 2. Should a corporation hedge? Why might it increase firm value? Are there any reasons why a firm would not want to he Explain in details. 3. In class we discuss...

  • 5. (a) Explain the differences between a forward contract and an option. [2] (b) An investor...

    5. (a) Explain the differences between a forward contract and an option. [2] (b) An investor has taken a short position in a forward contract. If Sy is the price of the underlying stock at maturity and K is the strike, what is the payoff for the investor? Does the investor expect the underlying stock price to increase or decrease? Explain your answer. (2) (c) (i) An investor has just taken a short position in a 6-month forward contract on...

  • True/False (1 Point each) 1) When bond prices decrease, their yields to maturity increase. 2) The...

    True/False (1 Point each) 1) When bond prices decrease, their yields to maturity increase. 2) The best forms of money and financial systems enjoy the benefits of trust, belief, and stability. 3) A fundamental function of a commercial bank is to take in deposits and make loans. 4) Traditional banks operate with low margins and high leverage. 5) Rates on bonds issued by a government can be negative. 6) ) The default risk premium is the same as the credit...

  • Discussion questions 1. What is the link between internal marketing and service quality in the ai...

    Discussion questions 1. What is the link between internal marketing and service quality in the airline industry? 2. What internal marketing programmes could British Airways put into place to avoid further internal unrest? What potential is there to extend auch programmes to external partners? 3. What challenges may BA face in implementing an internal marketing programme to deliver value to its customers? (1981)ǐn the context ofbank marketing ths theme has bon pururd by other, nashri oriented towards the identification of...

  • Please answer question 1,2,3 in details and explanation CASE 4 HELPING HAND ACCOUNTING FUNDAMENTALS "I got...

    Please answer question 1,2,3 in details and explanation CASE 4 HELPING HAND ACCOUNTING FUNDAMENTALS "I got real lucky when I was fired," William Pendleton was fond of telling his employees and business associates. Pendleton was an insurance salesman in Illinois nea hobby, he loved to tinker around the house and he developed a local reputation as a person who knew how to "fix things." Pendleton decided to capitalize on this reputation and opened a hardware store, Helping Hand, based on...

  • Please read the facts of the case and prepare answers for the following questions : 1...

    Please read the facts of the case and prepare answers for the following questions : 1 – What is the relevance of the $2,000 monthly payment to Dave Verden on the analysis of Jones’ financing needs? 2 – What metrics could you use to compare the historical financial results for Jones with the projected financial results under the four defined scenarios? 3 – Other than financing needs, what other issues should Jones address as he considers the different growth scenarios?...

  • Problem 1: Financial Statement Ratio Analysis (40 points total) Use the following financial statements for Dell,...

    Problem 1: Financial Statement Ratio Analysis (40 points total) Use the following financial statements for Dell, Inc. to answer the questions which follow: BALANCE SHEET (SMil) 2017 10,298 2018 7,972 % 28.9 2019 9,092 % 34.3 40.2 Cash & Short Term Investments Accounts Receivable Inventory Other Current Assets Total Current Assets Net Fixed Assets Intangibles Other Long Term Assets Total Assets 6,152 24.0 660 2.6 2,829 11.3 19.939 76.6 2,409 8.7 0 0 3,287 14.7 25,635 100.0 7,693 27.9 1,180...

  • Chapter overview 1. Reasons for international trade Resources reasons Economic reasons Other reasons 2. Difference between...

    Chapter overview 1. Reasons for international trade Resources reasons Economic reasons Other reasons 2. Difference between international trade and domestic trade More complex context More difficult and risky Higher management skills required 3. Basic concept s relating to international trade Visible trade & invisible trade Favorable trade & unfavorable trade General trade system & special trade system Volume of international trade & quantum of international trade Commodity composition of international trade Geographical composition of international trade Degree / ratio of...

  • Read the Article posted below, then answer the following questions: Mergers & acquisitions are a major...

    Read the Article posted below, then answer the following questions: Mergers & acquisitions are a major form of corporate diversification strategy, identify and discuss the top three reasons why most (50-60%) of acquisitions fail to create shareholder value. What are the five major components of “CEMEX Way” and why has this approach been so successful in post-acquisition integration? In your opinion, what can other companies learn from the “CEMEX Way” as a benchmark for acquisition management? Article: CEMEX: Globalization "The...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT