0
If the contract buyers use the underlying product, they use forward and futures contracts to eliminate market risk.
Say you are a manufacturer of breakfast cereal who will use 500,000 bushels of corn this year. If you buy corn only on the spot market, you have two worries: what the price will be when you need it, and whether there will be that much corn on the market this year. But by purchasing futures contracts you know what it will cost and when it will arrive.
If you're a farmer you'll use a forward contract to set the sale price of your corn, usually before you turn the key on your tractor to plant the new crop.
What else can I help you with?
Commodity brokers use forward and futures contracts for what reasons?
The seasonal nature of many commodities would lead to wide variation in supply and price without these contracts.
Use - 'looking forward to' or 'looking forward for'?
Use "looking forward to" when expressing interest or excitement about something that will happen in the future. Do not use "looking forward for."
How do you use commodity in a sentence?
Water is a commodity.
How do you use looking forward to in a sentence?
Examples: I'm looking forward to seeing you. I'm looking forward to my new job. I'm looking forward to my bright future. I'm look forwards and upwards.
Why do commodity brokers use forward and futures contracts?
If the contract buyers use the underlying product, they use forward and futures contracts to eliminate market risk. Say you are a manufacturer of breakfast cereal who will use 500,000 bushels of corn this year. If you buy corn only on the spot market, you have two worries: what the price will be when you need it, and whether there will be that much corn on the market this year. But by purchasing futures contracts you know what it will cost and when it will arrive. If you're a farmer you'll use a forward contract to set the sale price of your corn, usually before you turn the key on your tractor to plant the new crop.
What did the Babylonians use as a monetary commodity?
no
What is a commodity trading account for?
A commodity trading account is needed to trade commodities. One can use a commodity brokerage also, which would assist in the trading or purchasing of commodities.
What do commodity brokers use forward and futures contracts for?
Futures contracts and forward contracts are used to eliminate uncertainty in the commodities markets by locking in a price on a good to be delivered at a later date. Okay, a quick example follows: I make cookies and you grow wheat. Wheat is a liquid commodity in that the price changes all the time. I know that and so do you, so I go to you before you plant and offer you $7 per bushel for your whole harvest when it comes in, and you accept. This is a forward contract--a futures contract would have volume and time requirements you might not be able to meet. The risk to you is that wheat might be selling on the open market for $8 per bushel at harvest time and to me the risk is that it might be selling for $6. The other side of that is, if it's selling for $8 I'm going to be in trouble without this contract, and if it's selling for $6 then you are. But at $7 we are both getting a fair deal.
Commodity brokers use forward and futures contracts for which of the following reasons?
The seasonal nature of many commodities would lead to wide variations in supply and price without these contracts.The seasonal nature of many commodities would lead to wide variations in supply and price without these contracts.The seasonal nature of many commodities would lead to wide variations in supply and price without these contracts.(Apex)Rebecka Reyes was here :Dmyspace.com/darkemo14
What is the nickname brokers use for an up market?
A Bull Market
Can you explain how forward contracts work in financial markets?
Forward contracts are agreements between two parties to buy or sell an asset at a future date for a predetermined price. These contracts are customized and traded over-the-counter, meaning they are not standardized like futures contracts. Investors use forward contracts to hedge against price fluctuations or speculate on future price movements.
How are Commodity Funds used?
A commodity fund invests in commodities like food and precious metals. If the price of the commodity goes up, you make money. Commodity funds are used for investments in such as oil, corn, soy, or gold. Investing in items that are everyday use.
