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Sagot :
A buyer of a futures contract benefits if the price of the commodity increases is a true statement.
How do futures contracts impact the cost?
Futures prices decline as more contracts become available for trading as a result of arbitrageurs shorting futures contracts. The trader makes money when the proceeds from shorting the contracts exceed the money used to cover the position by purchasing the underlying asset.
The current cash cost of a commodity for immediate purchase and delivery is known as the spot price. The futures price secures the cost of the commodity that will typically be supplied several months from now at a different time than the present. With commodity futures, the buyer commits to buy or sell a specific amount of a physical commodity at a given price on a specific future date.
To learn more about future contracts, visit:
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