« previous next »

Author Question: Explain the differences between a forward contract and a futures contract. What will be an ideal ... (Read 124 times)

maychende

  • Hero Member
  • *****
  • Posts: 556
on: Jul 7, 2018
Explain the differences between a forward contract and a futures contract.
 
  What will be an ideal response?

Question 2

The term globalization refers to the establishment of worldwide operations and the development of standardized products and marketing.
 
  Indicate whether the statement is true or false


kingdude89

  • Sr. Member
  • ****
  • Posts: 336
Reply #1 on: Jul 7, 2018
Answer to Question 1

A forward contract is an agreement to exchange two currencies at a specified exchange rate on a set future date. No money changes hands until the delivery date of the contract. Banks quote forward prices in the same way as spot prices-with bid and ask prices at which they will buy or sell currencies. The bank's bid-ask spread is a cost for its customers.
Like a forward contract, a futures contract represents an agreement to buy or sell a currency in exchange for another at a specified price on a specified date. Unlike forward contracts, futures contracts are standardized to enable trading in organized exchanges, such as the Chicago Mercantile Exchange. While the terms of forward contracts are negotiated between a bank and its customer, futures contracts have standard amounts and maturity periods. Futures contracts are especially useful for hedging transaction exposure.

Answer to Question 2

TRUE


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Individuals are never “cured” of addictions. Instead, they learn how to manage their disease to lead healthy, balanced lives.

Did you know?

Amoebae are the simplest type of protozoans, and are characterized by a feeding and dividing trophozoite stage that moves by temporary extensions called pseudopodia or false feet.

Did you know?

Critical care patients are twice as likely to receive the wrong medication. Of these errors, 20% are life-threatening, and 42% require additional life-sustaining treatments.

Did you know?

In Eastern Europe and Russia, interferon is administered intranasally in varied doses for the common cold and influenza. It is claimed that this treatment can lower the risk of infection by as much as 60–70%.

Did you know?

Parkinson's disease is both chronic and progressive. This means that it persists over a long period of time and that its symptoms grow worse over time.

The conduction system of the heart; traces the path of the electrical impulse that stimulates the he The conduction system of the heart; traces the path of the electrical impulse that stimulates the he
Differences between a Nurse Practitioner Differences between a Nurse Practitioner
Differences between an antigen (Ag, in red) and a superantigen (SAg, in purple) and their ... Differences between an antigen (Ag, in red) and a superantigen (SAg, in purple) and their ...
Cross-arm stretch of cervical muscles with neck in forward flexion. Cross-arm stretch of cervical muscles with neck in forward flexion.
5. Social contract theorists believe that the social contract is/was a historical fact. ... 5. Social contract theorists believe that the social contract is/was a historical fact. ...
For the circuit in Figure 1, assume ideal diodes. The peak inverse voltage is approximately For the circuit in Figure 1, assume ideal diodes. The peak inverse voltage is approximately
Video: Bond types - Atomic structure and basis of bonds

For a complete list of videos, visit our video library