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FUTURES

A futures contract is an agreement transacted through an organised exchange to deliver an asset at a fixed price in the future.

Equity index future

An equity index futures contract is an agreement to exchange cash compensation payments based on the movements in the level of an equity index. Physical assets are not delivered.
Equity index futures are the most basic form of derivative. They have no market value in a portfolio; instead they have two legs of economic exposure each of equal value, one leg representing the equity index and the other leg economic or notional cash. Buying an equity index future will result in a long equity position and a short cash position; selling an equity index future will result in a short equity position and a long cash position.

  

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