--%>

Operation of currency forward and futures market

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

E

Expert

Verified

Forward market is an OTC market where forward contract for the sale or purchase of foreign currency is tailor-made between the client and its international bank.  No money changes hands up till the maturity date of the contract when the delivery and receipt are generally made.  A futures contract is an exchange-traded instrument with the standardized attributes stating the contract size and the delivery date.  Futures contracts are marked-to-market daily in order to reflect the changes in settlement price.  Delivery is made sometimes in the futures market.  Instead a reversing trade is made to close out a short or long position.

   Related Questions in Financial Accounting

  • Q : Determining interest rate parity

    Presently, spot exchange rate is $1.50/£ and three-month forward exchange rate is $1.52/£. Three-month interest rate is 8.0% per annum within the U.S. and 5.8% per annum within the U.K. Suppose that you can borrow as much as $1,500,000 or £1,000,000.

  • Q : Factors for surge in the international

    List some factors which are responsible for recent surge in the international portfolio investment (IPI)?

  • Q : Merits of standard costing Write down

    Write down the merits of standard costing?

  • Q : Project Advantages-disadvantages of

    Advantages-disadvantages of internal rate of return method

  • Q : Deviations from purchasing power parity

    Explain about deviations from purchasing power parity for countries competitive positions within the world market.

  • Q : Evaluation of discount and premium

    Describe how discount and premium are evaluated whenever the assets are priced-to-market. When would law of one price prevail within the international capital markets in case foreign equity ownership restrictions are imposed?

  • Q : Cash Discount State the definition of

    State the definition of Cash Discount?

  • Q : Discrimination to women and minority

    Most of the organizations have established policies to remedy discrimination whenever hiring women and minorities. Discuss whether you feel that affirmative action programs, reverse discrimination, and criteria of comparable worth are suitable forms of remedy. You mus

  • Q : Internalization theory of FDI Explain

    Explain internalization theory of the FDI. Specify the strength and weakness of this theory?

  • Q : What is Asset Disposition Asset

    Asset Disposition: Getting rid of the asset or security via a direct sale or some other technique. Quite frequently you will observe insider trades report a "disposition" of some number of shares; this merely means that they sold them.

    Discover Q & A

    Leading Solution Library
    Avail More Than 1460128 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads
    No hassle, Instant Access
    Start Discovering

    18,76,764

    1958166
    Asked

    3,689

    Active Tutors

    1460128

    Questions
    Answered

    Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

    Submit Assignment

    ©TutorsGlobe All rights reserved 2022-2023.