Details Title: Fin 220 Description: Chapter 20: Futures Forewards & Swaps Total Flash Cards: 11 Created: 12/15/2008 09:00:31		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Finance Flashcards
Cards in this set: Term Forward Contract Definition Deferred delivery of some asset at an agreed upon price today Term Futures Contract Definition Like a forward contract with more precise requirements Term Long Position Definition Commits to purchasing commodity at expiry date Term Short Position Definition Commits to delivering commodity at expiry date Term Clearinghouse Definition Middleman for futures contracts Term Open Interest Definition Outstanding long and short contracts held at a clearinghouse Term Convergence Property Definition Futures price and spot price must converge at maturity Term Expectations Hypothesis Definition Futures price is equal to the expected future spot price Term Normal Backwardation Definition Futures price will be bid down in order to be lower than the expected future spot price and give speculators a reason to take a long position Term Cotango Definition Purchasers rather than suppliers are hedgers Term Index Arbitrage Definition If futures prices are too high, short the futures contract and buy stocks in the index