Chap007 - Chapter Seven Outline Futures Contracts...

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7-1 Chapter Seven Outline Futures Contracts: Preliminaries Currency Futures Markets Basic Currency Futures Relationships Options Contracts: Preliminaries Currency Options Markets Currency Futures Options Basic Option Pricing Relationships at Expiry American Option Pricing Relationships European Option Pricing Relationships Binomial Option Pricing Model European Option Pricing Model Empirical Tests of Currency Option Models
7-2 Futures Contracts: Preliminaries A futures contract is like a forward contract in that it specifies that a certain currency will be exchanged for another at a specified time in the future at prices specified today. A futures contract is different from a forward contract in that futures are standardized contracts trading on organized exchanges with daily resettlement through a clearinghouse.
7-3 Futures Contracts: Preliminaries Standardizing features: Contract size Delivery month Daily resettlement Initial performance bond (about 2 percent of contract value, cash or T-bills, held in a street name at your brokerage)