The forward contract is an agreement between two parties about trading an underlying asset for a specific price and quantity at a specific future date. The price of the forward contract does not change at the expiration date. For instance, individual A agrees to take a short position (sell) in trading 10000 Egyptian pounds on 31st of July 2009 at $0.5 per EGP to individual B who agrees to take a long position (buy). Both individuals with short and long positions are obligated to sell or buy the underlying asset with a forward price (Hull 2003: 4). The problem with forward contracts is that they are associated with credit risk or what is called “counterparty risk”. For instance, individual A agrees to take a short position and sell 200 grams of silver for $10000 to individual B with long position. If the price of the 200 grams of silver became $5000 in the spot market at the expiration date, individual A will gain $5000. On the other hand, individual B will lose $5000. Therefore, individual B will announce bankruptcy, and attempts to escape from performing the forward contract (Kolb & Overdahl 2003: 4). Futures contracts: Future contracts are similar to forward contracts, but they are traded in organized exchange markets. …show more content…
They have the advantage of “Price-time priority”, which means that all individuals who are willing to take long or short positions go to one organized exchange, and begin matching sellers with specific orders with buyers who offer the best price available. Moreover, if several orders are having the same price, the one who come first has the priority to be matched. This helps in improving liquidity and minimizing the costs of searching. Individuals are able to select only future contracts that are available and introduced by the organized exchange, as the futures are standardized (Federal Reserve Bank of Boston 2002:
This case study examines various real estate contracts – the Real Estate Purchase Contract (REPC) and two addendums labeled Addendum No. 1 and Addendum No. 2 – pertaining to the sale of 1234 Cul-de-sac Lane in Orem, Utah. The buyers in this contract are 17 year old Jon D’Man and 21 year old Marsha Mello; the seller is Boren T. Deal. The first contract created was Jon and Marsha’s offer to purchase Boren’s house. This contract was created using the RESC form, which was likely provided by their real estate agent as it is the required form for real estate transactions according to Utah state law. The seller originally listed the house on a Multiple Listing Service (MLS); Jon and Marsha agreed that the asking price was too high for the neighborhood (although we are not given the actual listing price), and agreed to offer two-hundred and seven-thousand dollars ($207,000) and an Earnest Money Deposit of five-thousand dollars ($5,000). Additionally, the buyers requested that the seller pay 3% which includes the title insurance and property taxes. After the REPC form was drafted, the two addendums were created. Addendum No. 1 is from the seller back to the buyer, and Addendum No. 2 is the buyer’s counteroffer to the seller.
The threat of online competitors is also present to every discount broker that has not switched to online trading or chooses to remain with their current business model and not offer online services. These online trading sites have unique trading capabilities that otherwise are not present at Edward Jones. They offer sound advice on stocks and other investments instantly. Each customer has to call their Edward Jones advisor in order to place a trade. This makes sense to Edward Jones because they want to help prevent the rash decisio...
Derivatives as defined by Warren Buffet are time bombs, both for the companies that make use of them and the monetary framework. Fundamentally these instruments call for cash to change hands at a future date, with the add up to be dictated by one or more reference things, for example, premium rates, stock costs, or money values. Case in point, in the event that you are either long or short a S&P 500 prospects contract, you are a gathering to an extremely straightforward derivatives transaction, with your addition or misfortune determined from developments in the list. Derivatives contracts are of shifting length of time, running now and again to 20 or more years, and their quality is regularly attached to a few Variables.
In this case perhaps McCoy would wish to be a limited partner and be removed from the day to day operations. An option he could choose could be to be a Limited Liability Corporation, may come with additional costs, work and headaches, but even so as we with any business it has its advantages, which includes the flexibility of who manages the business, can be easier to raise capital and add or transfer ownership interests. Owners are no longer liable for business debts, but the
Joint Venture is “a partnership, individual, or corporation that pools labor and capital for a limited period of time” (Kubasek, Brennan, Browne, 2015, p. 431). This method can increase liability and limit outside opportunities where the business can not expand their product line and have to utilize the products provided by the company they have a joint in a agreement. The mission of the coffeehouse is to be unique and special. This type of model would not allow originality and for that reason, its not recommend that Shania get involved with a joint venture.
Pennings, Joost M.E. Research in Agricultural Futures Markets: Past Present and Future. Presentation Paper: Wageningen Agricultural University: Netherlands. 8 June 2001.
There are only a handful of stock market exchange sites such as; the American Stock Exchange (AMEX), the New York Stock Exchange (NYSE), and the National Association of Securities Dealers Automated Quotations (NASDAQ). Each site has several similarities as well as differences. An essential difference between the exchange sites is their trading principles. The NYSE was founded in 1792, and has more of an auction market; whereas NASDAQ was founded in 1971, and is more of a dealer market. (Weinburg,
Following a trend by the Federal government to liberalize anti-discrimination laws in favor of employees, the Department of Labor Office of Federal Contract Compliance Programs (“OFCCP”) has proposed regulations that would require employers who wish to keep their contracts (and subcontracts) with the Federal government to attempt to maintain a workforce where 7% of employees are individuals with disabilities. The public comment period for this proposal has just closed, and the OFCCP is now in the process of reviewing respondents’ reactions.
Futures and forward contracts are viewed as derivative contracts because their values are derived from an underlying asset. The forward contract is an agreement between two parties, which are buyer and seller and they must fulfil their contractual obligations at a price established at the beginning upon the expiration date, the buyer must pay the agreed price to the seller and the seller must deliver the underlying asset to the buyer. Futures contracts have a similar definition to forward contract but futures contracts are standardized transaction.
The case presented is that of Sam Stevens who resides in an apartment. He has been working on an alarm system that makes barking sounds to scare off intruders, and has made a verbal agreement with a chain store to ship them 1,000 units. He had verbally told his landlord, Quinn, about his new invention and Quinn wished him luck. However, he recently received an eviction notice for the violation of his lease due to the fact that his new invention was too loud and interrupting the covenant of quiet of enjoyment of the neighbors and for conducting business from his apartment unit.
What is actually considered a valid contract? The first issue we must look at in this contract dispute is to determine if there is even a valid contract. A valid contract has three basic elements an offer, an acceptance and consideration. If a contract meets your states requirements for a binding legal agreement, you are generally bound by that contract. The essential terms of a contract identify the parties to the contract, subject matter of the contract, contract price, and the time for performance of the contract. Intent to establish a contract must be definite and evident. Basically, it’s clear that you and the other person intended to enter a contract. If a contract appears to be binding and enforceable on its surface, that contract maybe
A contract is an agreement between two parties in which one party agrees to perform some actions in return of some consideration. These promises are legally binding. The contract can be for exchange of goods, services, property and so on. A contract can be oral as well as written and also it can be part oral and part written but it is useful to have written contract otherwise issues can be created in future. But both the written as well as oral contract is legally enforceable. Also if there is a breach of contract, there are certain remedies for that which are discussed later in the assignment. There are certain elements which need to be present in a contract. These elements are discussed in the detail in the assignment. (Clarke,
A contract is a promise that the law will enforce. In situations where a promise is breached, the law provides remedies. A contract is created when a promise that is made by a party creates a duty. Contracts all contain common elements of Offer, Acceptance, and Consideration, and may have two more parties known as promisors, promises, or beneficiaries. For a contract to be enforceable it must be made by competent parties. For example, if a contract is entered into where one party is a minor, not mentally competent, or insane, even if the other person believes it to be an enforceable contract, it will likely be found to be invalid in court.
A valid contract is an agreement including promises made between two or more parties with an intention of certain legal rights and legal responsibility that are enforceable. For there to be a contract – that must contain four essential elements- offer, acceptance, intention to create legal relations and consideration.
...ting in hedging activities in the financial futures market companies are able to reduce the future risk of rising interest rates. By participating in the financial futures market companies are able to trade financial instruments now for a future date (Block & Hirt, 2005).