futures Flashcards
1
Q
what are future contracts?
A
contracts between a seller and a buyer specifying a commodity or financial instrument to be delivered and paid for at contract maturity.
2
Q
What is a future price?
A
price negotiated by buyer and seller at which the underlying commodity or financial instrument will be delivered and paid for to fulfill the obligations of a future contract
3
Q
Difference to forwards from futures?
A
Futures are managed through an organized future exchange
4
Q
What is a short hedge in futures? Long hedge?
A
Sale of futures to offset potential losses from falling prices
long: purchase of futures to offset potential losses from rising
