Forwards and futures
As discussed in Stage 14, forwards and financial futures are agreements to buy (or sell) a government bond at a price fixed today (say, 90) with a delivery date in the future (Figure 17.1).
Figure 17.1. Financial futures
If the bond price at delivery date exceeds 90, there is a gain when you buy a future.
If the bond price falls to 87, there would be a loss since we would have to pay 90 for an asset which is worth only 87.