Fixed income instrument

chandniwadhwani92
Finance Junkie
Posts: 166
Joined: Mon Oct 06, 2014 7:36 am

Fixed income instrument

Postby chandniwadhwani92 » Wed Oct 15, 2014 12:50 pm

In schsewer it is given
Future contract are said to have zero value at the tym of entering into the contarct

How it is zero value?
Bcoz we know
when we enter into a contract we share some part of intial margin

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Fixed income instrument

Postby edupristine » Fri Oct 17, 2014 5:47 am

There is no price for entering into a futures contract. At the inception of the contract, there are no cash flows. Hence the value of a futures contract at the beg is zero.

The initial margin is deposited both by the buyer & seller of the contract, hence these cash flows are netted out.


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