Exercise 12 Answers

Exercise 12 Answers - a price increase or decrease? Price...

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EXERCISE 12 – ECON 423 WHO’S WHO IN THE FUTURES? Buyer Seller Position (Long or Short?) Long Short Obligation of the Party To buy the commodity or Asset on the settlement date. To deliver the commodity or asset on the settlement date Effect on Margin Account (Debit or Credit?) when spot price increases. Increase - Credited Decrease - Debited Who Hedges? User of the commodity. Buyer of the financial asset. Producer of the Commodity. Seller of the Financial Asset Is the Hedger insuring against
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Unformatted text preview: a price increase or decrease? Price Increase Price Decrease Who speculates in the futures market? A speculator who believes that the spot price of the commodity or asset will be higher in the future. (Expected change in price of the commodity or assets is positive) A speculator who believes that the spot price of the commodity or asset will be lower in the future. (Exchange change in price of the commodity or asset is negative)...
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