abhishreshthaa
Abhijeet S
Interest rate futures:
Interest rate futures are one of the most successful financial innovations in recent years. The underlying asset is a debt instrument such as a treasury bill, a bond, and a time deposit in a bank and so on.
For e.g. the International Monetary Market (a part of Chicago Mercantile Exchange) has a futures contract on US government treasury bills, three-month Eurodollar time deposits and US treasury notes and bonds.
The LIFFE has contracts on Eurodollar deposits, sterling time deposits and UK government bonds. The Chicago Board of Trade offers contracts on long-term US treasury bonds.
Interest rate futures are used by corporations, banks and financial institutions to hedge interest rate risk. A corporation planning to issue commercial paper for instance can use T-Bill futures to protect itself against an increase in interest rate.
A corporate treasurer who expects some surplus cash in near future to be invested in short-term instruments may use the same as insurance against a fall in interest rates.
A fixed income fund manager might use bond futures to protect the value of her fund against interest rate fluctuations. Speculators bet on interest rate movements or changes in the term structure in the hope of generating profits.
Interest rate futures are one of the most successful financial innovations in recent years. The underlying asset is a debt instrument such as a treasury bill, a bond, and a time deposit in a bank and so on.
For e.g. the International Monetary Market (a part of Chicago Mercantile Exchange) has a futures contract on US government treasury bills, three-month Eurodollar time deposits and US treasury notes and bonds.
The LIFFE has contracts on Eurodollar deposits, sterling time deposits and UK government bonds. The Chicago Board of Trade offers contracts on long-term US treasury bonds.
Interest rate futures are used by corporations, banks and financial institutions to hedge interest rate risk. A corporation planning to issue commercial paper for instance can use T-Bill futures to protect itself against an increase in interest rate.
A corporate treasurer who expects some surplus cash in near future to be invested in short-term instruments may use the same as insurance against a fall in interest rates.
A fixed income fund manager might use bond futures to protect the value of her fund against interest rate fluctuations. Speculators bet on interest rate movements or changes in the term structure in the hope of generating profits.