Bond Futures

A bond future is a financial derivative where counterparties contract with each other (via the future exchange in the case of listed contracts) to trade an underlying bond for delivery on a specific date in the future, called expiry a price agreed today. The nature and the amount of the bonds to deliver is dictated by the futures contract specification At expiry, the seller is required to deliver the bond (the Cheapest to Deliver) to the buyer.

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