Session 17: Derivatives Reading 70: Futures Markets and Contracts
LOS f: Describe the characteristics of the following types of futures contracts: Treasury bill, Eurodollar, Treasury bond, stock index, and currency.
Which is the only type of commodity where trading in forward contracts is larger than trading with future contracts?
Trading in foreign currency forwards is far larger than the trading in futures. For example, with international trade, businesses can hedge against adverse currency fluctuations. But each business arrangement is unique, and most require the flexibility of a forward, whose terms are not standardized, that meets their special needs. |