A futures contract is a commitment to purchase an item at a specified price and quantity at some point in the future.
How Do Futures Work?
- Futures contracts are derivatives that predetermine the price and volume of a stock, currency, or commodity exchange.
- Futures contracts are typically traded on an exchange like the CME Group, where traders can be matched with other speculators and business owners.
- The expiration date specified in the futures contract is measured in ticks. The smallest price increment for a trade is called a tick, and it usually costs one cent.
- The S&P 500 futures are an exception, with ticks that are equal to a quarter of an index point.
- Businesses use futures contracts to manage risk, and traders use them to make predictions about the direction of the market and a particular commodity.
- The standard contract for futures that trade on an exchange is typically established by the exchange, and there is no counterparty risk because the exchange clears all trades.
- Given futures contract result is : F = 1,125 × (1.04) − 33; F = 1,137.00.
To Learn more About futures contract refer to:
https://brainly.com/question/29243086
#SPJ4
