Example - Example January: An investor enters into a long...

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Example January: An investor enters into a long futures contract to buy 100 oz of gold @ $1050 in April. April: the price of gold $1065 per oz What is the investor’s profit assuming he holds to maturity? 1
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Answer (1065 – 1050) * 100 = $1,500 2
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Over-the Counter Markets The over-the counter market is an important alternative to exchanges. It is a telephone and computer-linked network of dealers who do not physically meet. Trades are usually between financial institutions, corporate treasurers, and fund managers. 3
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Size of OTC and Exchange Markets Source: Bank for International Settlements. Chart shows total principal amounts for OTC market and value of underlying assets for exchange market 4
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Forward contracts are similar to futures except that they trade in the over-the- counter market. Forward contracts are popular on currencies and interest rates. 5
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This note was uploaded on 01/19/2012 for the course FIN 4520 taught by Professor Lucyackert during the Spring '12 term at Kennesaw.

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Example - Example January: An investor enters into a long...

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