Cash Market vs Future Market

Cash Market vs Future Market

What is the Cash Market?

A cash market is a market place where financial tools like bonds and products, i.e. valuable alloys or agricultural commodities are purchased and sold for quick distribution (on a perfect date). It is also known as the spot market. In the cash market, there are 2 divisions, equities – where equities like shares are patronised and claims – where claims like government securities and mortgage securities are patronised.

What is Future Market?

Future Market is a commerce market place where the future agreements are purchased and sold. The word futures contract implies an agreement which is performed in the prospect. It is an agreement between 2 parties in which 1 party gives his or her consent to purchase a particular amount of a good or financial tool at a consented cost price and shipment of the material is done at a succeeding date (pre-specified) in prospect.

Also Check: Difference between Primary Market and Secondary Market

This article is a ready reckoner for all the students to learn the difference between the cash market and the future market.

Basis Cash Market Future Market
Meaning A cash market is a market place where financial tools like bonds and products, i.e. valuable alloys or agricultural commodities are purchased and sold for quick distribution (on a perfect date). Future Market is a commerce market place where the future agreements are purchased and sold. The word futures contract implies an agreement which is performed in the prospect.
Time Horizon Usually, business date + 2 or 3 days. At a certain prospect date.
Regulations Transfers over the counter (OTC) Exchanges only.

The above mentioned is the concept, that is elucidated in detail about ‘Difference between the Cash market and Future market’ for the Commerce students. To know more, stay tuned to BYJU’S.

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