Business Case Studies & Business Publications

Forwards and Futures

Conroy, Robert M.

Technical Note

Forwards and Futures

Conroy, Robert M.

F-1427 | Published October 3, 2007 | 13 pages Technical Note

Collection: Darden School of Business

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Product Details

This technical note introduces the basics of forward and futures contracts. It covers the very simplest contract on financial assets with no income and expands the discussion to cover contracts on financial assets with dividends, contracts on foreign currency and commodities. There is a discussion on the difference between forward/futures prices and the expected spot rate.

This is used in conjunction with a assignment sheet or case that asks students to estimate futures prices on different types of assets. The key learning objective for students to understand the relationship between spot prices and forward/futures prices.