Chapter 14 - Slides 01-14 - Futures Contracts
Author(s): Paiano, Frank
College: Southwestern College
Subject: Banking and Finance
Careful: Futures can be even more dangerous than options for speculators! Futures contracts are useful financial tools when used properly. They are also incredibly risky when used for speculation. For hundreds of years, futures contracts, commonly called futures, have been used to help facilitate the trade of commodities such as corn, wheat, oil, and precious metals between producers and consumers. The financial world began using futures to accomplish many of the same outcomes with regard to financial products. These are useful tools and play an important role in the world economy. However, for some, they are highly charged speculations that can make and lose fortunes overnight. As we will see, for speculators, individuals who are not producers and consumers of the underlying commodity, futures contracts are derivatives that are even much more potentially dangerous than options contracts.
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