Junior
What is a futures contract as a financial instrument?
sobes.tech AI
Answer from AI
A futures contract is a financial agreement that obligates the buyer to purchase, and the seller to sell, a specific asset (commodity, currency, securities) at a predetermined price and date in the future.
Main characteristics:
- Allows hedging against price change risks.
- Used for speculation on the change in the asset's value.
- Traded on specialized exchanges.
Example: a farmer enters into a futures contract to sell wheat in 3 months at a fixed price to protect against falling market prices.