When you’re a part of an investment market’s game and you want to have as many investment opportunities for your money’s value as you can only possibly have, then working with regular derivatives and bonds, just as well as with future bonds is an imperative.
But for those of our readers who either never dealt with this sector of the economy or want to get a full picture, explaining what bonds in general are and what good they are for your specific case studies, here’s a quick explanation.
A bond is a debt investment that sees the person who’s investing money issuing a loan of money to an entity (typically corporate or governmental) which thenwards borrows the funds for a specified limited period of time at a variable or fixed interest rate. Bonds are used by businesses of all sorts, municipalities, states and sovereign governments as a way of getting money and supply and fund with it a variety of projects and activities.
Owners of bonds are debtholders, or creditors, of the issuer.
So, while the regular, conventional bonds work in a kind of a straightforward way, the futures have a little bit more complicated scheme of operations.
Basically, the futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price.
Futures contracts then go over such details as the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash.