FUTURES PROFESSIONAL ENGLISH IN USE FOR FINANCE

 

PROFESSIONAL ENGLISH IN USE FOR FINANCE 34. FUTURES

 

A Commodity futures Forward and futures contracts are agreements to sell an asset at a fixed date in the future. Futures are traded on a wide range of agricultural products (including wheat, maize, soybeans, pork, beef, sugar, tea, coffee, cocoa, and orange juice), industrial metals (aluminium, copper, lead, nickel, and zinc), precious metals (gold, silver, platinum, and palladium) and oil. These products are known as commodities. B Financial futures More recently, financial futures have been developed. These are standardized contracts, traded on exchange, to buy and sell financial assets. Financial assets such as currencies, interest rates, stocks and stock market indexes fluctuate – continuously vary – so financial futures are used to fix a value for a specified future date (e.g. sell euros for dollars at a rate of €1 for $1.20 on June 30).     EXERCISES 34.1 Match the words in the box with the definitions below. Look at A opposite to help you. backwardation commodities forwards futures to hedge over-the-counter spot price     1 the price for the immediate purchase and delivery of a commodity 2 the situation when the current price is higher than the future price 3 adjective describing a contract made between two businesses, not using an exchange. 34.2 Complete the sentences using a word or phrase from each box. Look at A and B opposite to help you. 1 __________ __________ to charge a consistent price for their products. 2 __________ __________ to be sure of the rate they will get on bonds which could be issued ay a different rate in the future. 3 __________ __________ to know at what price they can borrow money to finance new projects. 34.3 Are the following statements true or false? Find reasons for your answers in B opposite. 1 Financial futures were created because exchange rates, interest rates and stock prices all regularly change. 2 Interest rate futures are related to stocks and shares.

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