Types of Financial Future

 There are lots of types of financial future which you should know as student of finance. We are explaining its detail in below lines.

1. Interest Rate Futures 

 You know that interest on different securities may increase or decrease due to changing business environment. If buyer and seller contract to buy or sell the debtsecurities at future date on the basis of current rate of interest. Then, it will be interest rate future.

 2. Forex Rate Futures 

  If foreign currencies are bought and sell at future date on the basis of current forex exchange rate, then it will be forex rate future. Buyer can buy us dollars, pounds and other foreign currencies through this type of future contract. Main aim is to minimize the loss due to changing of exchange rate.

3. Stock Market Index Future  

Every day, different stock exchanges show every company’s share’s different price through stock exchange index. So, there are big fluctuations in the price. If you have bought today at high price and tomorrow, if prices of shares will decrease, you will face losses because with this their capital will also decrease. So, it is very necessary to do future contract in the stock market index. Big mutual funds companies do same. They bought certain company’s shares at future date on current price. Now, whether price will increase or decrease, they have to pay same amount.

4. Bond Market Index Future 

Like share market future, bond market future contact can be done on the basis ofbond index trend. It is based on every day bond market prices. In this contract, fixed number of bonds are bought or sold at future date on current price.

 5. Consumer Market Index Future 

 This is the fifth type of future contract. Everyday, you read the prices of Gold and other consumer goods. If you will do its future contract, you may save from big losses. For example, A person bought Gold of 10 gram for future of end of six month at the current price of Rs. 27000. Current market price is Rs. 28000. Both are agree. Seller is agree because he think, prices will down up to Rs. 26000 and buy is also agree because he think price will reach Rs. 29000. So, if price will be Rs. 27500, then both parties will face minimum loss under this future contract. 
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