Futures Markets

What is the definition of Futures Contract?

• The raw material for producing a good. 
• A centralized market for trading futures contracts.
• A contract to buy a commodity.
• A cell phone contract

What is the definition of a commodity?

• A raw material for producing a good. 
• A centralized market for trading futures contracts.
• A contract
• Goods in the store ready to buy. 

What is the definition of a Futures Market?

• The place you go on Saturday mornings in the summer.
• A contract to buy a commodity
• A raw material for producing a good. 
• A centralized market for trading futures contracts.

What is a hedger?

• Individuals or firms who make purchases or sales.
• Individuals who accept risk in the hopes of making a profit. 
• Someone who trades contracts not commodities.
• Sell contracts before they expire. 

What is a speculator?

• Someone who trades commodities.
• Someone who trades contracts not commodities.
• Individuals or firms who make purchases or sales in the futures market.
• Individuals or firms who do not make purchases or sales in the futures market.

How did the Chicago Board of Trade begin?

• Farmers were mad at the merchants for not paying more.
• Merchants were mad at the farmers for not growing crops year round.
• Farmers and merchants needed a different way to buy and sell their goods. 
• Farmers and merchants asked for Chicago's help.

Which is not a negotiable component of a futures contract?
number ofcontracts, and b) the price for an individual contract.

• Number of contracts
• Price of the individual contract
• Information such as quantity, quality and delivery.

Which is not a non-negotiable to a futures contract?

• Quantity
• Number of contracts
• Delivery
• Quality 

How did the futures market enable prices of commodities to become public knowledge?

• There was such a small volume of trades that they could do it case by case. 
• The public wanted to know how much money the farmers were making. 
• The public wanted to know how much the merchants had to spend on their goods. 
• There was a such a large volume of trades that they could not do it case by case.

What does it mean to go long?

• Purchasing a contract in hopes of later selling it at a lower price.
• Purchasing a lot of contracts.
• Purchasing zero contracts. 
• Purchasing a contract in hopes of later selling the contract at a higher price.