Futures contract

A futures contract is a legal agreement to buy or sell a financial instrument or commodity, at a specific amount and on a specific date. The terms of futures contracts are standardized, so that they can be traded on exchanges. A futures contract is used to hedge a transaction that will be settled on a future date, or to speculate on the outcome of future events. Futures contracts are accounted for as derivatives.

Related Courses

Accounting for Derivatives and Hedges 
Corporate Finance