Topic: Derivatives

How Equity Forward Contracts Work?

An equity forward contract works in the same way as any other forward contract except that it has a stock, a portfolio of stocks or an equity index as the underling asset. It is an agreement between two parties to buy a pre-specified number of an equity stock (or a...

How is a Forward Contract Settled?

A forward contract can be settled in two ways: Delivery or Cash Settlement. In case of a deliverable forward contract, the party that is short the forward contract will actually deliver the underlying asset to the party that is long the forward contract. The...

Introduction to Forward Contracts

A forward contract is an agreement between two parties to buy or sell an underlying asset at a pre-specified price on a pre-specified date in the future. The assets underlying a forward contract could be anything, such as a commodity (gold, oil, cotton, etc.), or...

Transparency in Credit Default Swap Markets

Over-the-counter derivatives markets, and credit default swap markets in particular, were cast into the limelight during the recent financial crisis and have been criticized as being opaque and lacking transparency. Given the large notional size of OTC transactions...

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