When an interest-bearing security is the underlying asset for a futures contract, it is called:
A) a forward contract.
B) an interest rate futures.
C) a commission futures.
D) a speculative futures.
E) an interest rate swap.

Question

Quizplus · Accepted Answer

When an interest-bearing security, such as a bond, is the underlying asset for a futures contract, it is called an interest rate futures. A forward contract is a similar agreement between two parties, but it is not traded on an exchange like a futures contract. Commission futures and speculative futures are not common terms in finance. An interest rate swap involves parties exchanging interest rate payments without involving an exchange-traded contract.

When an Interest-Bearing Security Is the Underlying Asset for a Futures