Difference among currency forward market and futures market, Financial Management

Assignment Help:

Explain the basic differences between the operation of a currency forward market and a futures market.

Answer:  The forward market is an OTC market in which the forward contract for purchase or sale of foreign currency is tailor-made among the client and its international bank.  No money changes hands till the maturity date of the contract while delivery and receipt are commonly made.A futures contract is an exchange-traded instrument along with standardized features fixed contract size and delivery date.Futures contracts are marked-to-market every day to reflect modifications in the settlement price.  Delivery is rarely made in a futures market. Rather a reversing trade is finished to close out a long or short position.


Related Discussions:- Difference among currency forward market and futures market

Describe modigliani and miller approach of capital structure, Q. Describe M...

Q. Describe Modigliani and Miller Approach of Capital Structure? Ans. Modigliani as well Miller Approach: - The Modigliani-Miller approach is alike to the net operating income

How can we measure total return- rate of return, How can we measure Total r...

How can we measure Total return- Measuring the Rate of Return Total return can be defined as: Total returns = (Cash payment received + Price change over the period) / Purcha

Equity claims and debt instruments in financial securities, What is the dif...

What is the different between equity claims and debt instruments in financial securities? By getting conclusion about equity claims and debt instruments, that equity claims are

Merits and demerits of accept-reject criteria, Q. Merits of accept-reject c...

Q. Merits of accept-reject criteria? Merits of ARR:- (i) Simple: - ARR method is very simple to understand and use. (ii) Complete life time of the project is considered:

Firms indifference point, help me withh the calculation concept of the poin...

help me withh the calculation concept of the point where the firm is indifferent

Reasons for time preference of money, Q. Reasons for Time Preference of Mon...

Q. Reasons for Time Preference of Money? 1) Future Uncertainties: One of the reasons for preference for current money is that there is a certainty about it whereas the future

Need for credit and its nature, Need for Credit and its nature On the d...

Need for Credit and its nature On the demand side of the economy are the consumers of goods and services who require funds basically for acquiring certain consumer durables. Th

What are the benefits of traditional approach, What are the benefits of Tra...

What are the benefits of Traditional approach Traditional approach had a very narrow perception and was devoid of an integrated conceptual and analytical framework. It had pre

Cash flow yield, In structured products like mortgage-backed and asse...

In structured products like mortgage-backed and assets-backed securities, the cash flows include both principal repayment and interest. The complication arises wh

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd