《金融市场与机构 Jeff Madura》ch13.pptVIP

13 Financial Futures Markets Chapter Objectives Explain how financial futures contracts are valued Explain the use of futures to speculate or hedge based on anticipated interest rate changes Explain the use of stock index futures to speculate or hedge based on anticipated stock price movements Describe how financial institutions participate in futures markets Background on Financial Futures Futures are a derivative security Derivatives Securities whose value is derived from the value of some underlying asset or financial instrument Derivative security prices related to factors affecting prices in the spot market For example, bond futures prices are related to what is happening in markets where bonds are bought and sold for immediate delivery Background on Financial Futures Standardized agreement to deliver or take delivery of a financial instrument at a specified price and date Price is determined by traders for standardized contracts The underlying financial instrument Settlement date Form of delivery for underlying asset Trading on organized exchanges provides liquidity and guaranteed settlement Background on Financial Futures Exchange members trade contracts in trading pits Organized exchanges include Chicago Board of Trade and Chicago Mercantile Exchange Only members or those leasing privileges can transact business on the floor of the exchange Commission brokers Floor traders Regulated by the Commodities Futures Trading Commission or CFTC Background on Financial Futures Establish account and initial margin Maintenance margin and margin call Order to trading floor Open outcry trading Clearinghouse function Daily market-to-market of contracts Background on Financial Futures To Speculate Take a position with the goal of profiting from expected changes in the contract’s price No position in underlying asset To Hedge Minimize or manage risks Have position in spot market with the goal to offset risk Interpreting Financial Futures Tables Futures contract pri