Futures contract
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I have to answer this question below in 350 words. I have been reading the chapter and don't fully understand this question:
Define a futures contract and explain the process of daily resettlement with futures prices.
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Solution Summary
The posting helps with a business philosophy problem. The solution explains a future contract and the process of daily settlement. Concepts discussed include currency, commodities, interest rates, buyers and contracts. The explanation is given in 376 words.
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Problem: Define a futures contract and explain the process of daily resettlement with futures prices.
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In a futures contract, the buyer of the contract agrees to buy the asset at a fixed price at some time in future. Future contracts are standardized contracts traded on an exchange. Futures can be for currency, commodities, interest rates etc. For example, we may buy a futures contract in oil. The futures contract would specify the quantity, price and the settlement date. ...
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