The agreement to “buy or sell a debt instrument at a specified future date at a pre-determined price” is called?
[A]Interest Rate Future
[D]Interest Rate Derivative
Interest Rate Future
An IRF contract is an agreement to buy or sell a debt instrument at a specified future date at a pre-determined price. The cash-settled IRFs provide market participants an option to hedge risks arising from fluctuations in interest rates, which depend on various factors, including RBI policy, demand for liquidity and flow of overseas funds.