33UIUC%20FIN%20300%20Futures%20Contract%20Analysis%20FA10%20v2.0

33UIUC%20FIN%20300%20Futures%20Contract%20Analysis%20FA10%20v2.0

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Futures Contract Futures Contract Analysis Analysis UNIVERSITY OF ILLINOIS College of Business - Department of Finance Finance 300 (Financial Markets)
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Futures Futures P t (FC or VC ) - P t+1 Risk Futures Contracts +P t+1 Futures traders pay a minimum per contract dollar amount (margin) to a broker in order to purchase the right and the obligation to initiate a long or a short position from an agreed upon reference point (Price t ) during an agreed upon time period. The economic purpose of the contract is to transfer risk from one party to another.
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Futures Futures P t (FC or VC ) - P t+1 Risk Futures Contracts +P t+1 Cost Risks Include: Price Risk (Real Assets, Financial Assets, Interest, & Foreign Exchange), Quantity Risk, Time Risk, and/or Volatility Risk.
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Futures Futures P t (FC or VC ) - P t+1 Risk Futures Contracts +P t+1 Futures Contract Profit or Loss (Long Position) = {P t +1 – P t } * Contract Specifications; (Profit: P t +1 > P t ) Futures Contract Profit or Loss (Short Position) = {P t +1 – P t } * Contract Specifications; (Profit: P t +1 < P t )
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33UIUC%20FIN%20300%20Futures%20Contract%20Analysis%20FA10%20v2.0

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