Referring to the standards that mention in the table below, compare between options and futures contracts.      Area Options Contract Futures Contract 1 Profile of Obligations     2 Price of Contract     3 Kinds of contract     4 Asset Underlying     5 Implement Contract

Q: Describe the basis of Futures contracts and discuss the potential risks and rewards.

A: An agreement where there are two parties, say one is a buyer and another one is a seller decides to…

Q: The advantage of using a forward rate agreement FRA over a futures contract is: *       A. FRAs are…

A: FRA and Future Contracts are two type of arrangements. FRA means forward rate agreements in which it…

Q: Thoroughly describe the concept of hedging, focusing on the FX markets. In addition to the economic…

A: Foreign exchange market is defined as the globally decentralized or an over the counter market…

Q: Advantages of currency futures contracts relative to forward contracts include _     a. Higher…

A: A futures contract is a legal contract to purchase or sell an underlying asset or security at a…

Q: 2. What is the major difference in the obligation of one with a long position in a futures (or…

A: The main difference between a futures (or forward) contract and an options contract is that a buyer…

Q: a) Futures contracts and options on futures contracts can be used to modify risk. Required:Identify…

A: The derivatives are the contract which obtains its value from some underlying asset and earns return…

Q: Briefly explain the pay-off structure of futures and options contract. Also make it more clear with…

A: Futures are the derivative contract where you get the rights as well as the obligations. For example…

Q: The market that deals in futures and options is called O a Over-the-counter market Ob. Derivatives…

A: Financial markets are the markets that play the role of intermediaries between the buyers and…

Q: Compare and contrast the commitments taken on by the following:   A futures contract seller versus a…

A: A futures contract seller is a party who has agreed to sell a particular asset at a particular…

Q: MCQ: The type of option that gives the right to buyer to sell the underlying option at spe price is…

A: A put option is an instrument which provides its holder an option to sell an underlying asset on a…

Q: the following in a couple of sentences. d) Compare and c

A: Compare and contrast options with futures : The most significant distinction among options as well…

Q: .How can options, futures, and forward contracts be used to devise simple hedging strategies?…

A: Options, futures and forwards are derivative contracts that can be used to hedge the underlying…

Q: Which of the following is an example of long term instruments? (select all that apply) a. Asset…

A: Long Term Instruments are the instruments which are issues for the longer time period, generally…

Q: What are the pros and cons of using options traded in the over-the-counter market and in an exchange…

A: Options can be defined as those contracts which allow an investor to purchase or sell a security on…

Q: define and explain convenience yield, and describe how it is incorporated into the futures pricing…

A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: Discuss the advantages and disadvantages of using options to hedge as compared to using futures…

A: Introduction: The future is the financial instrument of the derivative market in which a buyer and…

Q: detail two procedures which the seller of a futures contract can use to lock in a gain at some time…

A: A futures contract is a legally binding agreement to acquire or sell a certain commodity, asset, or…

Q: In the context of options, what is the "premium"? A) The cost of entering into the option contract…

A: Call and put options are financial derivatives that provide the holder the right, but not the…

Q: Which of the following is a reason why the default risk of a futures contract is assumed to be less…

A: Derivatives securities are trading into the market for the purpose of gaining returns. These…

Q: hy might an individual purchase futures contracts, rather than the underlying assets? Please…

A: Future contracts are derivative contracts that means they derive value from the underlying assets…

Q: The market price paid for an option is best defined as: a. The strike price of the option b. The…

A: Options are of two types Call and put

Q: : A futures contract is used for hedging. Carefully explain why the daily settlement of the contract…

A: in future contracts large amount of buying and selling is done and trades are done some initial…

Q: Q19: Using Futures contract to transfer price risk is called     diversifying.     hedging…

A: Derivative contract can be used for hedging, speculation and arbitrage

Q: How is credit risk managed in case of foreign exchange futures contracts? Discuss with the use of an…

A: Credit risk management in foreign exchange (forex) futures contracts is a crucial aspect of…

Q: define the four major types of derivatives and discuss their uses.   b) discuss the historical and…

A: A derivative is a financial contract whose value is derived from the underlying asset, which could…

Q: Highlight the key difference between option, futures and forward contracts.

A: Option, futures and forwards are three examples of financial derivatives. Option gives traders the…

Q: Define the terms, or give short explanations.         -futures contract/option -hedge -hedger…

A: A derivative is a financial contract whose value is derived from the underlying asset, which could…

Q: Identify the fundamental distinction between a futures contract and an option contract, and briefly…

A: Fundamental difference between a futures and option contract lies in following parameters:…

Q: In the futures markets the buyer of a financial futures contract: a. has the obligation to deliver…

A: A future contract is a legal agreement to buy or sell a particular commodity at predetermined price…

Q: which one is correct please confirm? Q5: Parties who have sold a futures contract and thereby…

A: Whenever a vendor sells safety first with the purpose of buying back it or shielding it later at a…

Q: What is an interest-rate futures contract? How does it differ from an interest-rate forward…

A: Since you have posted multiple independent questions, according to the guidelines, only the first…

Q: The major difference between futures and options arises from the different obligations of buyers…

A: In futures contract, both the buyer and seller of the contract are obligated to buy and sell the…

Q: Show graphically and explain the profits and losses of buying futures relative to buying call…

A: If an investor buys Future contract or Call Option Suppose the investor buys a call option at…

Q: What are the main differences between forward contracts and futures contracts. b) What is meant by…

A: Since you have asked multiple questions, we will solve the first question for you. Please ask…

Q: Which type of financial derivative is used to protect against adverse price movements in an asset?…

A: Financial derivatives are instruments whose value derives from the underlying assets or securities,…

Q: What are the key differences between future and forward contracts? a) direct contract for forwards…

A: Future and forward contracts are both financial instruments used for hedging and speculative…

Q: Define the terms, or give short explanations.             -naked short sale -notional amount…

A: A derivative is a financial contract whose value is derived from the underlying asset, which could…

Q: Describe forwards, futures, and swaps.  What are the features of each type of derivative and how are…

A: A forward contract may be a personalized contract between 2 parties purchasing or offering an asset…

Q: 37-Which one of the following derivatives is flexible and tailored to specific requirements of the…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: Discuss the difference between forward and futures contracts, focusing on the pros and cons of each.

A: Hedge:   An investment strategy that is formed to reduce the risk of the adverse price movement of…

Q: Define each of the following terms:a. Derivative; natural hedgeb. Option; call option; put optionc.…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: An agreement between two parties to exchange a series of specified periodic cash flows in the future…

A: In derivatives, there are forward contract, future contract, option contract as well as swap…

Q: Value of a putable bond is A. O value of callable bond -option cost B.O value of nonputable bond +…

A: Options are a derivative instrument which gives the investor the right but not the obligation to buy…

Q: Briefly discuss the relative advantages and disadvantages of an exchange-traded futures contract…

A: Futures contract is referred to as the legal agreement for purchase or sell of the specified or…

Q: Financial Futures Markets: Explain how sellers of financial futures contracts can offset their…

A: Financial futures contract:A financial futures contract is a type of agreement between two parties…

Q: Forwards and Futures: How are forwards and futures similar? How are they different? Briefly explain…

A: A forward contract is referred to the customized contract, which is between the two parties for…