Future Contract Essay

Net Margin is the ratio of net profits to revenues of a company. It is used as an indicator of a company’s ability to control its costs and how much profit it makes for every dollar of revenue it generates. Net Margin is calculated using the formula: Net Margin = (Net Profit / Revenues ) * 100 Net margins vary from company to company with individual industries having typically expected ranges given similar constraints within the industry. For example, a retail company might be expected to have low net margins while a technology company could generate margins of 15-20% or more. Companies that increase their net margins over time generally see their share price rise over time as well as the company is increasing the rate at which it turns dollars earned into profits.

This measures the relationship between net profits and sales of a firm. The net profit margin is indicative of management’s ability to operate the business with sufficient success not only to recover revenues of the period, the cost of merchandise or services, the expenses of operating the business and the cost of the borrowed funds, but also leave a margin of reasonable

Futures are a contract or legal agreement, where an investor agrees to purchase a certain amount of a physical good or financial asset on a specific date for a set price.

Spot deferred contract has some characteristics of forward sale but is more flexible since the SEC sellers have a choice when to deliver the gold. Though the threshold for this vehicle to hedge risk is very high, only for companies in good shape in terms of reserves, costs and leverage, American Barrick’s excellence qualifies it to implement this vehicle. We regard it a salutary vehicle, to the effect of which the gradually increasing use of it in American Barrick

Based on the 1988 Supreme Court case of Corn Product Refining Co. v. Commissioner (350 U.S. 46; 76 S.Ct. 20; 100 L.Ed. 29), hedging transactions were determined to be used to support business practices of certain commodities. Such hedging transactions are normal for businesses engaged in commodity sales such as coal or corn to protect against market

Rule : : Contract formation requires mutual assent (offer and acceptance), consideration, and no viable defenses to contract formation.

To make informed decisions about whether to obtain securities or manage speculation goods. The contracts should hold financial benefits of transactions.

Bernie a resident of Richmond, Virginia decides to sale his 2006 Ford Fusion for $13,000.00 and places an ad in his local newspaper on February 1st. After several weeks without any inquiries, Vivian contacts Bernie on March 1st stating she will pay him $12,000.00 for the car. Bernie arranges to meet with Vivian on March 5th to complete the deal. Vivian comes to Bernie’s house on March 10th and says she will give Bernie $12,500.00 for the car; but she needs three additional weeks to come up with the money. Bernie agrees but only if Vivian puts down a deposit. Vivian agrees and Bernie drafts an agreement stated the sale will must take place no later than March 31st. Vivian reads and signs the agreement and

       past work done by seller, intellectual property rights, and references associated with a given seller.

Derivative contracts were either negotiated with specific counterparties (over-the-counter) or were standardized contracts executed and traded on an exchange. Negotiated over-the-counter derivatives were comprised of forwards, swaps, and specialized options contracts. Over the counter derivatives can be tailored to meet the customers’ needs with respect to time and quantity and they are not traded in an organized exchange. On the other hand, standardized exchange-traded derivatives consisted of futures and options contracts. Even though over-the-counter derivatives were usually not traded like securities in an exchange, they might be terminated or assigned to an alternative counterparty. Standardized derivatives trade on an exchange and have time and quantity that are fixed.

“Over-the-counter derivatives will be required to be traded on regulated exchanges, and the trades will have to be submitted to regulated clearinghouses” (First Data Corporation, 2010). The clearinghouses must also submit proposals to the regulators before accepting swaps for clearing. Regulators will have the authority to impose capital, margin, reporting, record-keeping and code of conduct requirements on swap dealers and participants to ensure there are adequate financial resources to meet their responsibilities (First Data Corporation, 2010).

The net margin indicates how high the percentage of the profit of a company to its sales is. …..

The option contract can be a convenient solution for the buyer when the demand is difficult to predict due to market volatility. This type of contract helps the buyer to reduce the inventory risk and keep good relations with the suppliers, as they both agree to fix a price and adjust orders quantities after the demand have been determined, paying a reservation price that will be lost if the buyer decide not to exercise the option. For the supplier, sometimes can be beneficial, sometimes not, depending on the uncertainty in the demand and how much it cost for them to fulfill orders in shorter periods of time. However, as the buyer must pay a reservation price, the supplier will always be compensated by the additional revenue resultant from the option.

Multi Commodity Exchange of India (MCX) is a demutualised commodity exchange with permanent recognition from the Government of India to facilitate online trading, clearing and settlement operations for commodity futures markets across the country. Since its inception millions of small and medium enterprises, corporate houses, exporters, importers and traders have benefitted from this nationwide electronic trading platform through its efficient and transparent price discovery and price risk management. MCX ranks No. 1 in silver, No. 2 in gold, and No. 3 in crude oil.

Among the most fundamental risks, associated with exchange-traded derivatives, is variable degree of risk. According to Ernst, Koziol, & Schweizer (2011), the transactions in