DISTINCTION BETWEEN FUTURES AND FORWARDS CONTRACT. Forward contracts are often confused with futures contracts. The confusion is primarily because both serve essentially the same economic functions of allocating risk in the presence of future price uncertainty. However futures are a…
LIMITATIONS OF FORWARD MARKETS Forward Markets world-wide are afflicted by several problems like LACK OF CENTRALIZATION OF TRADING, LIQUIDITY and COUNTER PARTY RISK. In the first two of these, the basic probk much flexibility and generality. The forwc. estate…
USE OF FUTURES MARKET RY INDEX FUNDS Futures markets can be used for creating synthetic index funds. Synthetic index funds created using futures contracts have advantages of simplicity and low costs. The simplicity stems from the fact that index futures…