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

Define deadweight loss, What is meant by deadweight loss?  Why does a price...

What is meant by deadweight loss?  Why does a price ceiling usually result in a deadweight loss? Deadweight loss considers to the benefits lost to either consumers or producers

State the factors of tests of controls, State the factors of Tests of contr...

State the factors of Tests of controls Tests of controls may include · Enquiries and observations corroborating internal control functions. Inspection of docu

Accounting change, Q. Accounting Change? Accounting Change - Change i...

Q. Accounting Change? Accounting Change - Change in (1) an accounting principle (2) an accounting estimate or (3)the reporting entity which necessitates DISCLOSURE and explan

Why is the replacement value of assets method, Why is the replacement value...

Why is the replacement value of assets method not generally used to value complete businesses? The replacement value of assets method isn't often applied to entire business val

Accounting entity - accounting principle, Accounting Entity - Accounting Pr...

Accounting Entity - Accounting Principle For accounting reasons it is suppose that business has separate existence and its entity is different from that of its owner(s). In si

Explain the checklists -documenting the accounting system, Checklists or qu...

Checklists or questionnaires Audit firm will have a standard list of control questions. Audit staff can quickly ascertain which if any, are in operation by the client. There

Major risk return decision areas, Q. Major Risk Return Decision Areas? ...

Q. Major Risk Return Decision Areas? 1) Financial Analysis and Control: This area is concerned with the Financial Statements, i.e. Income Statement, Balance Sheet, Funds Flow S

State about the audit plan contents, State about the Audit plan contents ...

State about the Audit plan contents 1. Report requirements and terms of reference. 2. A review of business and financial position, reviewing why changes had occurred in curr

Yield spread measures for floating-rate securities, In a floating rat...

In a floating rate security, the coupon rate changes periodically as per the reference rate. The yield to maturity of floating rate securities cannot be calculated as

Trading mechanism of future, Trading Mechanism Of Future: Flow of the ...

Trading Mechanism Of Future: Flow of the Order Any person who wants to trade in futures has to contact a Futures Commission Merchant (FCM) or a broker. First, let us look

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