Futures contracts were created for producers and consumers of certain goods to protect themselves against future price changes. So, if two people want to bet on the future prices of those goods, they enter into a contract that specifies that one person will buy or sell that good at a pre-determined price in the future. The first party has gained protection from falling prices while the other party has gained protection from rising prices; thus, both parties can predict their risk when making production/consumption decisions today. This concept remains true regardless of whether the party is a producer or consumer.…
Author: Harrison
Harrison
Harrison is a Professional Blogger and Computer Geeks. Apart from Blogging, he is a fun loving person. His areas of Interest are Computers, Web Designing, Photography and WordPress.