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With the Help of a Diagram Illustrate How Clearing House

question 52

Essay

With the help of a diagram illustrate how Clearing House Interbank Payment System (CHIPS) is used to move money from one company to another in an international location.


Definitions:

Futures Contract

A contractual arrangement to purchase or sell a specific financial instrument or commodity at a set price on a future date.

Basis

The difference between the spot price of an asset and its future price, or the cost basis of an investment.

Futures Price

The agreed price for the future delivery of assets in a futures contract.

Spot Price

The current market price at which a particular asset, like commodities, currencies, or securities, can be bought or sold immediately.

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