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A commodity futures market exists within the boarder commodities market for which reasons?
Wiki User
∙ 12y ago
Finding prices: Buyers and sellers can trade standardized contracts for commodities at a later date on the futures market. This works with cost disclosure as market members altogether decide the fair worth of the item founded on market interest elements.
Management of risk: Commodity producers and consumers can hedge against price volatility through futures contracts. Market participants are able to manage their risk exposure and protect themselves from adverse price movements by locking in a future price through futures contracts.
Investment and speculation: Speculators and investors who seek to profit from commodity price fluctuations without actually owning or delivering the underlying asset are drawn to the futures market. Market liquidity is improved, and opportunities for capital appreciation are created as a result.
Possibilities of arbitrage: Arbitrage opportunities are made possible by the futures market. By buying low in one market and selling high in the other, traders can take advantage of price differences between the spot market, which is the current market price, and the futures market.
a more efficient market: By allowing market participants to make informed decisions based on available price and market information, the futures market makes efficient resource allocation easier. It makes it possible for efficient price formation and overall market stability by providing a platform for trading commodities that is both transparent and regulated.
Musclegarage Fitness
Wiki User
∙ 12y agoContracts setting the price and date for a commodity purchase are transferable
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What Commodity futures contracts can be bought and sold on the open market for reasons?
Futures contracts remain valid even if the original parties to the contract sell the rights.
What is the purpose of commodity traders?
There are many different reasons one might need a commodity trader. One typically trades commodities to help bring in additional funds and increase one's money.
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
Why does demand curve slope downward?
The demand curve slopes downwards due to the following reasons (1) Substitution effect: When the price of a commodity falls, it becomes relatively cheaper than other substitute commodities. This induces the consumer to substitute the commodity whose price has fallen for other commodities, which have now become relatively expensive. As a result of this substitution effect, the quantity demanded of the commodity, whose price has fallen, rises. (2) Income effect: When the price of a commodity falls, the consumer can buy more quantity of the commodity with his given income, as a result of a fall in the price of the commodity, consumer's real income or purchasing power increases. This increase induces the consumer to buy more of that commodity. This is called income effect. (3) Number of consumers: When price of a commodity is relatively high, only few consumers can afford to buy it, And when its price falls, more numbers of consumers would start buying it because some of those who previously could not afford to buy may now afford to buy it, Thus, when the price of a commodity falls, the number of its consumers increases and this also tends to raise the market demand for the commodity. (4) various uses of a commodity (5) law of diminishing marginal utility
Why does the demand curve downward sloping?
The demand curve is the opposite of the supply curve and it assumes that the cheaper the goods become the more consumers will purchase Demand curve is slope downward because of inverse relationship between price and quantity. The demand curve slopes downwards due to the following reasons (1) Substitution effect: When the price of a commodity falls, it becomes relatively cheaper than other substitute commodities. This induces the consumer to substitute the commodity whose price has fallen for other commodities, which have now become relatively expensive. As a result of this substitution effect, the quantity demanded of the commodity, whose price has fallen, rises. (2) Income effect: When the price of a commodity falls, the consumer can buy more quantity of the commodity with his given income, as a result of a fall in the price of the commodity, consumer's real income or purchasing power increases. This increase induces the consumer to buy more of that commodity. This is called income effect. (3) Number of consumers: When price of a commodity is relatively high, only few consumers can afford to buy it, And when its price falls, more numbers of consumers would start buying it because some of those who previously could not afford to buy may now afford to buy it, Thus, when the price of a commodity falls, the number of its consumers increases and this also tends to raise the market demand for the commodity. (4) various uses of a commodity (5) law of diminishing marginal utility It is assumed that if all thinngs remain constant once the price of a good decreases you buy more hence the reason for the negative slope dowards of the demand curve
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.
What Commodity futures contracts can be bought and sold on the open market for reasons?
Futures contracts remain valid even if the original parties to the contract sell the rights.
What is the purpose of commodity traders?
There are many different reasons one might need a commodity trader. One typically trades commodities to help bring in additional funds and increase one's money.
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
Why does demand curve slope downward?
The demand curve slopes downwards due to the following reasons (1) Substitution effect: When the price of a commodity falls, it becomes relatively cheaper than other substitute commodities. This induces the consumer to substitute the commodity whose price has fallen for other commodities, which have now become relatively expensive. As a result of this substitution effect, the quantity demanded of the commodity, whose price has fallen, rises. (2) Income effect: When the price of a commodity falls, the consumer can buy more quantity of the commodity with his given income, as a result of a fall in the price of the commodity, consumer's real income or purchasing power increases. This increase induces the consumer to buy more of that commodity. This is called income effect. (3) Number of consumers: When price of a commodity is relatively high, only few consumers can afford to buy it, And when its price falls, more numbers of consumers would start buying it because some of those who previously could not afford to buy may now afford to buy it, Thus, when the price of a commodity falls, the number of its consumers increases and this also tends to raise the market demand for the commodity. (4) various uses of a commodity (5) law of diminishing marginal utility
Give reasons for increase prices in imported commodities?
do some more f-ing research. lol
Why was the national war labor board created?
This has a couple of reasons actually because of the immigrants wanting the submission of boarder. Then created this in 1345
Why does the demand curve downward sloping?
The demand curve is the opposite of the supply curve and it assumes that the cheaper the goods become the more consumers will purchase Demand curve is slope downward because of inverse relationship between price and quantity. The demand curve slopes downwards due to the following reasons (1) Substitution effect: When the price of a commodity falls, it becomes relatively cheaper than other substitute commodities. This induces the consumer to substitute the commodity whose price has fallen for other commodities, which have now become relatively expensive. As a result of this substitution effect, the quantity demanded of the commodity, whose price has fallen, rises. (2) Income effect: When the price of a commodity falls, the consumer can buy more quantity of the commodity with his given income, as a result of a fall in the price of the commodity, consumer's real income or purchasing power increases. This increase induces the consumer to buy more of that commodity. This is called income effect. (3) Number of consumers: When price of a commodity is relatively high, only few consumers can afford to buy it, And when its price falls, more numbers of consumers would start buying it because some of those who previously could not afford to buy may now afford to buy it, Thus, when the price of a commodity falls, the number of its consumers increases and this also tends to raise the market demand for the commodity. (4) various uses of a commodity (5) law of diminishing marginal utility It is assumed that if all thinngs remain constant once the price of a good decreases you buy more hence the reason for the negative slope dowards of the demand curve
Why would high commodity prices and low interest rates help to maintain share prices?
There are many reasons high commodity prices and low interest rates help to maintain share prices. This keeps the market competitive.
What brings the price of commodities down?
Two things: oversupply, and lack of demand. This is one of the reasons the government pays people not to farm, and buys commodities for its various aid programs. Uncle Sam knows farmers operate on the verge of bankruptcy when things are going good. He also knows if a few farmers flood the market with a commodity it's going to hurt everyone, including the farmers that did it. By subsizing the farmer things work out better and cheaper for us all - because last I checked I don't have enough room in my apartment to grow wheat.
What are some reasons why one would make an investment in futures?
The price exposure when investing in futures is the same as buying a share, but futures require less capital. Therefore, an investor can trade in amounts up to 5 or 10 times greater than regular share trades. Some advantages of investing in futures include being able to gear your investment, going short in the market, and making an investment that tracks the entire market though one simple transaction.
How are Futures useful to an Investor?
My opinion is that they're not. Millions of people have tried speculating in the commodities market and gotten taken. Two reasons exist for this. First of course is the fact commodities change price all the time. And second is the reality of a futures contract: by entering into one, you guarantee you will buy whatever it is the contract says you will, on the date it says on the form. So you have a July wheat futures contract that's marked for 600 cents per bushel, wheat is selling for 500 cents per bushel, the bakers and millers know you have nowhere in your house to store 150 tons of wheat, and it's June. "Well gee Mr. Speculator, too bad about the price of wheat, I'll take that contract off your hands for...oh, 485 cents per bushel." You of course still need to pay the man with the five truckloads of wheat 600 cents per bushel. Options contracts, by comparison, have a LOT of uses to an investor. You can use them to stop losses or lock in gains. You can buy stock cheap with them.
