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For which one of the two parties involved in a forward commitment through a forward contract...

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Finance

For which one of the two parties involved in a forwardcommitment through a forward contract or a futures contract; arethe following market conditions (occurring after inception of thecontract) profitable? Explain each in 2 lines:

A. Scarcity of the underlying?

B. Sharp increase in spot price of the underlying?

C. Sharp decrease in spot price of the underlying?

D. Severe inflation?

Answer & Explanation Solved by verified expert
4.3 Ratings (947 Votes)
The two positions involved in a forward or futures contract is the long position which is the buyer position buying the underlying and the short position which is the seller selling the underlying asset in the contract A Scarcity of underlying Scarcity of underlying implies that the    See Answer
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For which one of the two parties involved in a forwardcommitment through a forward contract or a futures contract; arethe following market conditions (occurring after inception of thecontract) profitable? Explain each in 2 lines:A. Scarcity of the underlying?B. Sharp increase in spot price of the underlying?C. Sharp decrease in spot price of the underlying?D. Severe inflation?

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