Examining the purpose of futures contracts

Level: Undergraduate | Grade: 2.1 | Approx. Word Count: 700

Examining the purpose of futures contracts image

Click image to view 1st page of PDF

Overview

The ultimate aim of this brief essay is to provide students with an explanation of why futures contracts are often utilised as an integral element of stock market investments strategies. 

Futures are defined as derivative financial contracts that are agreed between the two parties, namely the seller and the buyer. However, based on the nature of these derivatives, they can be traded on the stock market by parties who are not related to the seller/buyer, namely investors Their main benefit is the flexibility of the options available to investors that can be used to improve the financial outcomes