About this Course s markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are some common types of derivatives contracts. Based on your understanding of forward and futures contracts, identify the differences between the two: The derivatives markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are some common types of derivatives contracts. These are exchange traded standardized contracts to buy or sell an asset at a specific time in the future at a specified delivery price. These contracts possess performance risk, implying that the party having losses may not be able to make payments to fulfill the contract. Which of the following are used to hedge against fluctuating interest rates, stock prices, and exchange rates? Commodity futures Financial futures Fitcom Corp. is planning to build a new production facility that will cost $10 million. It plans to finance this project with 10-year bonds that would carry a 7% interest rate if they were issued today. However, the company does not need the money for six months. Which of the following actions would hedge Fitcom Corp. against an increase in interest rates? Take a long position in interest rate futures Take a long position in foreign exchange futures Take a short position in foreign exchange futures Take a short position in interest rate futures