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Unformatted text preview: Chapter 26- Futures Contract: A standardized, exchange traded, legal agreement between a buyer and a seller in which the buyer agrees to take delivery of something at a specified price at the end of a designated period of time and the seller agrees to make delivery- Settlement Date (Delivery Date): The designated date at which the parties in a futures contract must transact- Futures Price: The price at which the parties in a futures contract agree to transact- Underlying: The asset or instrument parties agree to exchange in a futures contract- Long Position (Long Futures): When the investor takes an initial position in the market by buying a futures contract- Short Position (Short Futures): When the investor takes an initial position in the market by selling a futures contract- Nearby Futures Contract: The futures contract for a given underlying with the closest settlement date- Most Distant (Deferred) Futures Contract: The futures contract for a given underlying farthest away in time from settlement- Cash Settlement Contracts: A futures contract in which the settlement is made in cash only- Open Interest: The number of contracts that have been entered into but not yet liquidated- Clearinghouse: The corporation that is associated with an exchange and that guarantees that the two parties to the transaction will perform- Initial Margin: When a position is 1 st taken in a futures contract, the amount per contract specified by the exchange that must be put up for margin (deposit for a contract)- Equity: The sum in a futures account of all margins posted and all daily gains less all...
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- Spring '08
- Futures Commission