Term
| What do the cash forward contract and futures contract have in common? |
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Definition
Both parties have an obligation:
BUYER (long): to take delivery
SELLER (short): to make delivery |
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Term
| How does a futures contract differ from a cash forward contract (4)? |
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Definition
1. A futures contract is for a standard amount
2. Time and location for delivery are set
3. Non-personal
4. Can be offset:
a. Long positions can be liquidated by selling
b. Short positions can be covered by buying
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Term
| Who approves a futures contract terms? |
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Definition
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Term
| What do exchanges provide |
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Definition
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Term
| What are in the terms of a futures contract? (4) |
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Definition
1. Size
2. Basis Grades
3. Time/place of Delivery
4. Margin Requirements |
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Term
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Definition
the standard grade that a commodity must meet to be accepted as the actual of a futures contract.
you can also assign a lower/higher grade for commodities at a discount/premium |
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Term
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Definition
1.Own contracts/commodities
2.Buy or sell contracts
3.Set prices of contracts |
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