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Bond Futures Contract

What does Bond Futures Contract mean?

A future contract whose underlying asset is a Bond. Future contract is an agreement between the buyer and seller, where the former agrees to buy an underlying asset (bond) from the latter. The price of the asset is determined at the time of purchase and but the delivery takes place at a later time (future date).

Futures Knowledge Explains Bond Futures Contract

A bond future is an obligation that a contract holder gets into while he purchase or sell a bond. This obligation has to be met on a specified date and at a predetermined price. The terms and conditions of bond futures contracts are standardized. Bond futures, for example 10-Year Treasury Note Futures, are traded on exchanges and investors can easily close their position before the set maturity of the contract.

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