Ch01HullFundamentals5thEd

Ch01HullFundamentals5thEd - Introduction Chapter 1...

Info icon This preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
Fundamentals of Futures and Options Markets , 5 th Edition, Copyright © John C. Hull 2004 1.1 Introduction Chapter 1
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Fundamentals of Futures and Options Markets, 5th Edition, Copyright © John C. Hull 2004 1.2 The Nature of Derivatives A derivative is an instrument whose value depends on the values of other more basic underlying variables
Image of page 2
Fundamentals of Futures and Options Markets, 5th Edition, Copyright © John C. Hull 2004 1.3 Examples of Derivatives Futures Contracts Forward Contracts Swaps Options
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Fundamentals of Futures and Options Markets, 5th Edition, Copyright © John C. Hull 2004 1.4 Ways Derivatives are Used To hedge risks To speculate (take a view on the future direction of the market) To lock in an arbitrage profit To change the nature of a liability To change the nature of an investment without incurring the costs of selling one portfolio and buying another
Image of page 4
Fundamentals of Futures and Options Markets, 5th Edition, Copyright © John C. Hull 2004 1.5 Futures Contracts A futures contract is an agreement to buy or sell an asset at a certain time in the future for a certain price By contrast in a spot contract there is an agreement to buy or sell the asset immediately (or within a very short period of time)
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Fundamentals of Futures and Options Markets, 5th Edition, Copyright © John C. Hull 2004 1.6 Exchanges Trading Futures Chicago Board of Trade Chicago Mercantile Exchange LIFFE (London) Eurex (Europe) BM&F (Sao Paulo, Brazil) TIFFE (Tokyo) and many more (see list at end of book)
Image of page 6
Fundamentals of Futures and Options Markets, 5th Edition, Copyright © John C. Hull 2004 1.7 Futures Price The futures prices for a particular contract is the price at which you agree to buy or sell It is determined by supply and demand in the same way as a spot price
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Fundamentals of Futures and Options Markets, 5th Edition, Copyright © John C. Hull 2004 1.8 Electronic Trading Traditionally futures contracts have been traded using the open outcry system where traders physically meet on the floor of the exchange Increasingly this is being replaced by electronic trading where a computer matches buyers and sellers
Image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern