can someone explain to me the terms

[HokaGe-SaMa]

forward rates, spot rates, forward contract, futures contract mean?
and can use in an example. thanks finance majors.

[Limeade]

Investopedia.com enter those terms in the search bar

[Black]

forward rates, spot rates, forward contract, futures contract mean?
and can use in an example. thanks finance majors.

lol finance pwns u

[HokaGe-SaMa]

werd, i gonna just study all her old tests.

[Black]

chisholm?
1st test is cake, 2nd or 3rd is the awakening.

[HokaGe-SaMa]

yeah, chisholm. guess it cant be too hard if i look at it everyday.

[Pr3Lud3PLaYa]

yeah, chisholm. guess it cant be too hard if i look at it everyday.

I hated that class!!! C- in her class but then again, I took it the same semester as Stats. What's funny is that I got an A in every Finance class after that.

[speedtek]

^did you have to retake it? thought you need a "C" for it to count towards your degree

[Pr3Lud3PLaYa]

^did you have to retake it? thought you need a "C" for it to count towards your degree

nope. When I applied, they said everything was good and just needed to pass my last class. All my Finance classes had to give me a 2.0 GPA to graduate and I did that easily.

[aznsupra]

forward rates, spot rates, forward contract, futures contract mean?
and can use in an example. thanks finance majors.

forward contract and futures contract. pay for something now, or agree on a price now, and deliver goods, or settle contract in cash at a later date.

example: i buy a crude oil for $60/ barrel for delivery 6 months from now. 6 months goes by, crude is trading at $90/ barrel, i either A) buy the crude for 60/barrel even though its currently at 90, or i close my position out and make $30 profit/ barrel

forward rate- used in pricing or cost of the futures contract.

example: take my crude oil above. i have contract to pay $60 per barrel, when it is currently trading at $50/barrel. why did i pay 60 then when i should pay 50? b/c i need to make sure i have oil 6 months from now, and im betting that oil will increase in price therefore i am locking in a price to protect against the future rise in price. its not free, noticed i paid $10/barrel more than what its worth. this is the cost associated with me the buyer not wanting to take delivery of it yet, and the seller having to hold onto it for me, and also the price protection.

spot price- current price of something at a specific time.

example: again using my crude oil... spot price today is 50/barrel. spot price for today to buy crude 6 months from now is 60/barrel. spot price 6 months later is 90/barrel

hope that helps a little.
K

[HokaGe-SaMa]

thanks, very clear and to the point.

thanks for the time

[rene]

forward contract and futures contract. pay for something now, or agree on a price now, and deliver goods, or settle contract in cash at a later date.

example: i buy a crude oil for $60/ barrel for delivery 6 months from now. 6 months goes by, crude is trading at $90/ barrel, i either A) buy the crude for 60/barrel even though its currently at 90, or i close my position out and make $30 profit/ barrel

forward rate- used in pricing or cost of the futures contract.

example: take my crude oil above. i have contract to pay $60 per barrel, when it is currently trading at $50/barrel. why did i pay 60 then when i should pay 50? b/c i need to make sure i have oil 6 months from now, and im betting that oil will increase in price therefore i am locking in a price to protect against the future rise in price. its not free, noticed i paid $10/barrel more than what its worth. this is the cost associated with me the buyer not wanting to take delivery of it yet, and the seller having to hold onto it for me, and also the price protection.

spot price- current price of something at a specific time.

example: again using my crude oil... spot price today is 50/barrel. spot price for today to buy crude 6 months from now is 60/barrel. spot price 6 months later is 90/barrel

hope that helps a little.
K


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