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Options and Futures

Hedging

As a financial expert, it is important to understand the concept of hedging. This involves mitigating the risk of price fluctuations in the cash market by taking a counter position in the futures market. This strategy, known as hedging, is commonly used by businesses to safeguard against unfavorable price changes. There are two types of hedging, namely Selling (Short) Hedge and Purchasing (Long) Hedge, which are both utilized by hedgers to protect their assets.

Discount Rate

The Federal Reserve Bank sets the interest rate for loans, which is the amount of money charged for borrowing funds. This rate is a crucial aspect of the economy as it influ...

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Offset

When entering into futures or options contracts, it is important to consider the potential for risk management through liquidation. This involves taking a position that is o...

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Introducing Broker

In the world of finance, we refer to a person or organization that takes orders to buy or sell futures contracts or commodity options as a broker. However, it is important t...

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Security

In the realm of finance, you may come across two types of investments: common and preferred stock, as well as bonds issued by corporations, governments, or quasi-government ...

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