« previous next »

Author Question: Explain the differences between a forward contract and a futures contract. What will be an ideal ... (Read 178 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?

Patients who have been on total parenteral nutrition for more than a few days may need to have foods gradually reintroduced to give the digestive tract time to start working again.

Did you know?

About 80% of major fungal systemic infections are due to Candida albicans. Another form, Candida peritonitis, occurs most often in postoperative patients. A rare disease, Candida meningitis, may follow leukemia, kidney transplant, other immunosuppressed factors, or when suffering from Candida septicemia.

Did you know?

The lipid bilayer is made of phospholipids. They are arranged in a double layer because one of their ends is attracted to water while the other is repelled by water.

Did you know?

Fewer than 10% of babies are born on their exact due dates, 50% are born within 1 week of the due date, and 90% are born within 2 weeks of the date.

Did you know?

Although puberty usually occurs in the early teenage years, the world's youngest parents were two Chinese children who had their first baby when they were 8 and 9 years of age.

Personality differences in the United States Personality differences in the United States
A pharmacist can explain to a patient why medication may look different and ensure the correct ... A pharmacist can explain to a patient why medication may look different and ensure the correct ...
Regional differences affect soil fertility Regional differences affect soil fertility
Sensory Differences Between Species Sensory Differences Between Species
What is the differences between RNA seq and RAD seq? What is the differences between RNA seq and RAD seq?
Video: The 4 steps of translation Animation

For a complete list of videos, visit our video library