67 Forward Commitment

Question 1

Forward contracts

Answer 1

1) Customized, no active secondary market
2) Specified assets
3) Specified date in future

Question 2

Futures contracts

Answer 2

1) Standardized
2) Exchange-traded, active secondary market
3) Require margin deposit
4) No counterparty default risk

Question 3

Specifics of futures contract

Answer 3

1) Quality and quantity of good
2) Delivery time
3) Place manner of delivery

Question 4

Settlement price

Answer 4

Average of trades during closing period used to calculate margin

Question 5

Swaps

Answer 5

For a notional amount, each party makes periodic payments based on an interest rate, or on the performance of an index/bond/portfolio/commodity

Question 6

Credit default swaps

Answer 6

Protection buyer makers periodic payments, protection seller pays only if credit event occurs.

Question 7

Forward commitments

Answer 7

Obligations to perform (futures, swaps, etc.)

Question 8

Contingent claims

Answer 8

Depends on an event (options, credit derivatives)