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DERIVATIVES > Future Contracts > Flashcards

Future Contracts Flashcards

1
Q

Characteristics

A

Padronized
Daily adjustment (yield-100)

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2
Q

If the Interest Rate are neagative correlated to the Price of u/l, what should be preferiable: fwd or future?

A

Foward!

If the price of underlying assets goes down, you need to deposit margin!!

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3
Q

Payments on fwd rates and future rates

A

Fwd- exibit convexity (discounted to the beggining of the loan period)

Future - linear (no convexity)

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4
Q

About adjustments of future contracts:
What happens the end of the day with the VALUE and the PRICE of the contract:

A

Value = remain 0 each day (daily adjustment)

Price = floating during the period

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5
Q

About OTC margin of financial intermediaries

A

Imposes margin similar to those of standardized future.

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6
Q

If Interest Rates has 0 volatility or
Futures prices are uncorrelated with interest rate, what happens with

Fwd and Futures prices?

A

They are going to be the same

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DERIVATIVES (8 decks)

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