Futures and forwards are both derivative instruments and a derivative. Both contracts are legal undertakings to take delivery (buy) or to deliver (sell) the underlying asset on an agreed date in the future. The contract price is agreed and fixed at the start of the contract. – Agree a price ‘upfront’ for delivery and settlement on the agreed date.
Key learning objectives:
What is a derivative?
What is a forward and futures trade?
Identify the principal difference between a forward trade and a futures trade
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Introduction to Interest Rate Swaps and Use Cases
David Leeming • 17:58