Definition of Futures Contract
Following Björk we give a definition of a futures contract. We describe a futures contract with delivery of item J at the time T:
- There exists in the market a quoted price F(t,T), which is known as the futures price at time t for delivery of J at time T.
- The price of entering a futures contract is equal to zero.
- During any time interval, the holder receives the amount . (this reflects instantaneous marking to market)
- At time T, the holder pays F(T,T) and is entitled to receive J. Note that F(T,T) should be the spot price of J at time T.
Read more about this topic: Futures Contract
Famous quotes containing the words definition of, definition, futures and/or contract:
“Beauty, like all other qualities presented to human experience, is relative; and the definition of it becomes unmeaning and useless in proportion to its abstractness. To define beauty not in the most abstract, but in the most concrete terms possible, not to find a universal formula for it, but the formula which expresses most adequately this or that special manifestation of it, is the aim of the true student of aesthetics.”
—Walter Pater (1839–1894)
“... we all know the wag’s definition of a philanthropist: a man whose charity increases directly as the square of the distance.”
—George Eliot [Mary Ann (or Marian)
“One of the things that is most striking about the young generation is that they never talk about their own futures, there are no futures for this generation, not any of them and so naturally they never think of them. It is very striking, they do not live in the present they just live, as well as they can, and they do not plan. It is extraordinary that whole populations have no projects for a future, none at all.”
—Gertrude Stein (1874–1946)
“A good businessman never makes a contract unless he’s sure he can carry it through, yet every fool on earth is perfectly willing to sign a marriage contract without considering whether he can live up to it or not.”
—Dalton Trumbo (1905–1976)