Derivative contract
This query is : Open
27 September 2014
In forward contract value(payment) is fixed and take delivery hence is not derivative contract But is it derivative contract if the term of settlement of contract is cash settlement ? i.e.,not physical delivery but exchange of difference .
Nikhil Kaushik
(Expert)
27 September 2014
yes very much it is a derivative contract...
27 September 2014
So conclution is that derivative contract is dependant on agreement between parties for the term of settlement .If physical delivery and payment is fixed then its not derivative contract and cash settlement then its derivative contract but why in all finance related books there is mentioned that forward contract is the derivative instrument...?
27 September 2014
Plz clear my doubt about forward contract as derivative instrument as mentioned above...thanks in advance.....
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