A. How is futures valuation different from futures valuation? Futures and futures contracts are considered derivative contracts because their values ​​are derived from an underlying asset. Futures contract is an agreement between two parties, which are the buyer and the seller and they have to fulfill their contractual obligations at a price established at the beginning on the expiration date, the buyer has to pay the agreed price to the seller and the seller must deliver the underlying asset to the buyer. Futures contracts have a similar definition to futures contracts, but futures contracts are standardized transactions. The valuation reflects the amount of money needed to terminate the contract and the market requirements to value these contracts in the event of default on the contracts. There are a few key differences in the valuations of these contracts. First, in the event of a default on the futures contract, it would require cash settlement to reduce the credit exposure and risk of the futures contract. The forward price is equal to the spot price doubled at the favorable interest rate at maturity. In other words, it is the present value (PV) that is equal to the future value (FV) of the spot rate. Thus, it can be traded at a premium or discount to the spot price. Additionally, this will result in two positions, one of them will have a positive valuation and the other will have a negative valuation. The value of the futures contract would vary relative to the market spot price throughout the life of the contract. On the other hand, the value of the futures contract is calculated as the number of contracts multiplied by the contract size, which is also multiplied by the daily margin change, which means that it not only has a futures price fixed at time 0 b...... middle of paper ......important when calculating the valuation of futures and forward contracts?The most important factors when calculating the valuation of contracts futures and futures are the time value of money (present value), stocks (dividends or cash flow), Over the life of the contract with a known dividend yield, the value of a stock futures contract at time t is equal to the present value of the difference between the price agreed to pay for the asset at time T, F (0, T) and the value of the asset that acquires under the contract at time T, minus the present value of known dividends to be paid. Additionally, during the life of the contract, if the stocks have a known cash flow that leads to a stock futures contract, the price of the futures contract is equal to the spot price, minus the present value of the known cash flow , added at the appropriate interest rate for the hour until the due date.