Question

What are financial futures contracts? What is meant by a short position in a financial futures? A long position? How are each of these affected by changes in interest rates?

Answer 1

Financial futures are obligatory contracts which are standardized in nature and which will be enforcing the buyers and sellers to execute the contract at a certain date.

These contracts are meant for having a futuristic position and they are continuously traded.

To have a short position in financial future will mean that the trader will want to to take the security price down in order to make profit because he is expecting the prices of particular security to fall.

long position means getting bullish on share and the trader wants the share to go up in order to gain.

These are affected negatively very change of the interest rates because there can be a a reduction in the time value of these future contracts