Lecture 18_FUTURES

Lecture 18_FUTURES - Lecture18 FutureMarketsand Contracts...

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Lecture 18 Future Markets and  Contracts L18 Xiaoding Liu 1 FIN4243 Fall 2009
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Futures Contracts Very much like the forward contracts Can be either deliverable or cash settlement  contracts, can be settled earlier Used by speculators and hedgers L18 Xiaoding Liu 2 FIN4243 Fall 2009
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Futures vs. Forwards Futures  Forwards Trade on organized exchange Trade on OTC Standardized  contracts Customized contracts clearinghouse  is the counterparty  to all futures contracts Contracts with the originating  counterparty A deposit of initial  margin  is required Usually cash is not exchanged at  initiation Government regulates futures market Not regulated L18 Xiaoding Liu 3 FIN4243 Fall 2009
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Characteristics of Futures  Contract Standardization Clearinghouse Margins L18 Xiaoding Liu 4 FIN4243 Fall 2009
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Standardization Specify the quality and quantity of goods  that can be delivered, the delivery time,  and the manner of delivery The exchange sets the minimum price 
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This note was uploaded on 12/03/2009 for the course FIN 4243 taught by Professor Dudley during the Fall '08 term at University of Florida.

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Lecture 18_FUTURES - Lecture18 FutureMarketsand Contracts...

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