3
Futures Contracts
Learning Objectives
After completing this chapter, you will be able to answer the following questions:
- What is a futures contract?
- What are the differences between a futures contract and a forward contract?
- What is the role of a clearing corporation in futures exchanges?
- What is meant by margin and marking-to-market in futures markets?
- How to understand futures quotes?
- How can one arbitrage between futures markets and spot markets?
- How are futures contracts traded?
In Chapter 2, the concept of forward contracts and how forward contracts can be used for hedging purposes were discussed. Certain inherent problems with forward contracts led to the development of futures contracts. In this chapter, we will discuss the reasons ...
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