{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Futures for Lean Hogs on Aug 4,

Futures for Lean Hogs on Aug 4, - price from the other...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Futures for Lean Hogs on Aug 4, 2009 1
Image of page 1

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

View Full Document Right Arrow Icon
Regulation of Futures Regulation is designed to protect the public interest Regulators try to prevent questionable trading practices on the floor of the exchange or by outside groups Four key regulators: Broker Exchange and Clearinghouse Industry self-regulatory bodies Government agencies (CFTC, SEC) 2
Image of page 2
Accounting & Tax It is logical to recognize hedging profits (losses) at the same time as the losses (profits) on the item being hedged It is logical to recognize profits and losses from speculation as they are incurred Roughly speaking, this is what the accounting and tax treatment of futures in the U.S. and many other countries attempts to achieve 3
Image of page 3

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

View Full Document Right Arrow Icon
Forward Contracts A forward contract is an OTC agreement to buy or sell an asset at a certain time in the future for a certain price There is no daily settlement (but collateral may have to be posted) . At the end of the life of the contract one party buys the asset for the agreed
Image of page 4
Image of page 5

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

View Full Document Right Arrow Icon
Image of page 6
Image of page 7

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

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: price from the other party 4 Profit from a Long Forward or Futures Position Profit Price of Underlying at Maturity 5 Profit from a Short Forward or Futures Position Profit Price of Underlying at Maturity 6 Forward Contracts vs Futures Contracts Forward Futures Private contract between two parties Traded on an exchange Not standardized Standardized Usually one specified delivery date Range of delivery dates Settled at end of contract Settled daily Delivery or final settlement usual Usually closed out prior to maturity Some credit risk Virtually no credit risk 7 Foreign Exchange Quotes • Futures exchange rates are quoted as the number of USD per unit of the foreign currency • Forward exchange rates are quoted in the same way as spot exchange rates. This means that GBP, EUR, AUD, and NZD are USD per unit of foreign currency. Other currencies (e.g., CAD and JPY) are quoted as units of the foreign currency per USD. 8...
View Full 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