Interest rate futures

(1) The underlying debt securities are essentially banker's acceptances, government bonds and Treasury bills whose value fluctuates with changes in interest rates. (2) Interest rate futures can be used to hedge short- or long-term interest rate risk, depending on the nature of the interest rate of the underlying securities, since there is an inverse relationship between interest rate fluctuations and the price of the underlying securities. Short-term interest rate futures, for example bankers' acceptance futures, are thus distinguished from long-term interest rate futures, for example bond futures.