Derivatives

What are Futures

A futures contract is essentially the same as a forward, except that the deal is made through an organized and regulated exchange rather than being negotiated directly between two parties. In a Physically Delivered Contract one side agrees to deliver a commodity or asset on a future date (or within Read more…

Derivatives

What are Forwards

A forward contract is made directly between two parties. In a physically delivered forward contract one party agrees to buy an underlying commodity or financial asset on a future date at an agreed fixed price. The other party agrees to deliver that item at the stipulated price. Both sides are Read more…

Derivatives

What are Swaps

A swap is an agreement made between two parties to exchange payments on regular future dates, where each payment leg is calculated on a different basis. For example, suppose that a US company has to make interest payments on a euro loan over the next five years. Unfortunately its income Read more…

Bonds

Day Count Convention In Bonds

Day-count convention is used to calculate accrued interest between coupon payments. This convention helps to determine the number of days between payment, thus helping with calculation of how interest is accrued over a period. This convention dictates how the period between payments is calculated, by deciding numbers of days in Read more…

Bonds

Bond Investors

There are two categories of bond investors, big firms and individual investors. Institutional Investment funds such as mutual funds, money market funds, and ETFs Pension funds Insurance companies Banks Hedge funds Monetary authorities (central banks) State and local governments Foreign governments and other overseas entities Retail Individual users can opt Read more…