Question

What is future market? Explain the risks in future market.

Answer 1

A future market is an auction market in which participants buy and sell commodity and futures contracts for delivery on a specified future date. Examples of futures markets are the New York Mercantile Exchange, the Kansas City Board of Trade, the Chicago Mercantile Exchange, the Chicago Board Options Exchange and the Minneapolis Grain Exchange

Answer 2

1.A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.

2.Risks-

a.Counterparty Risk

b.Liquidity Risk

c.Market Risk

d.Interconnection Risk