Advantages and Disadvantages of Future Contracts

Advantages and Disadvantages of Future Contracts

Future Contracts

A future contract is to buy or sell a given quantity of underlying asset at a predetermined date and at a price fixed in advance. In finance, a futures contract is a standardized contract between two parties to exchange at some future date. There are two types of futures contracts i.e. Futures contracts and the forward contracts (Redhead, 2007). Futures contract is a kind of transaction accounts. Traded here are not physical objects or securities but contracts for transactions to be made in the future. Price of the product, which ...