Conclusion futures on interest rates means

Conclusion futures on interest rates means that the seller undertakes to enclose a standard deposit amount at an interest rate which is fixed at the time of the sale contract. Date of execution of the futures contract removal of some interval of time from the date of closing, and is standard. The buyer of futures contract, interest shall accept the deposit on similar terms. Hedging Futures - a process which resulted in minimizing interest rate risk position of the compensating activity in the futures market. This operation allows you to compensate for losses that were inflicted on the main position due to adverse changes in interest rates, income from the futures position. The correct statement is the opposite, namely, income received as a result of favorable market conditions in the main position, offset by losses in futures trading. So in theory the result of hedging should be always the same and does not depend on the direction of change in the price of the underlying instrument. Interest rate swap - an agreement whereby one party provides periodic payments to a certain currency, the amount which is calculated from a certain fixed rate, while the other - provides periodic payments in the same currency, the amount is determined on the basis of certain variable interest rate, such rate of LIBOR ( with all the calculations are based on a certain amount, expressed in a particular currency). To conclude interest rate swap agreement, the parties to limit the risks associated with changes in market interest rates. Basis swap - an agreement whereby one party provides periodic payments to a certain currency, the amount which is calculated on a variable interest rate, while the other performs periodic payments in the same currency, calculated on the basis of the variable of interest (in this case, all calculations are based on a certain amount of expressed in a particular currency). Category: Management Operations Commercial Bank | Tags: transaction