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What is Forward vs Futures Contracts Explained about?

1. The key differences between a forward and futures contract are that the settlement price of a forward is fixed over the life of the contract, while futures contracts are marked to market daily. 2. Basis risk occurs because changes in the spot asset price are not perfectly correlated with changes in the price of the delivered asset under a forward/futures contract, as they trade in different markets. 3. To hedge interest rate risk exposure from issuing GICs in 3 months, a bank should enter a long hedge

Author

Alok Singh

Language

EN