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Futures and Forwards

These contracts help hedge the risk of longer-term price movements. If you believe that the price of gold will rise, being long a gold future could be extremely profitable.

Challenge Quizzes

Level 1-2

True or False?

Selling an item on eBay is an example of a forward contract.

Image credit: The logo is trademark of Ebay.

How does the price of a future change as volatility of the underlying increases?

If the oil future is in contango, which of the following activities are we most likely to observe?

Image credit: Wikipedia Suicip

A publicly traded firm is in desperate need of money. However, due to it's credit rating, it is unable to obtain loads from the market.

Which of the following trades is the best for it to do?

You buy a May Gold Forward contract from a Lehman Brothers trader. What happens when Lehman collapsed?

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