Final answer:
A commodity future is a financial contract that allows investors to buy or sell a specific quantity of a commodity at a predetermined price in the future. The Chicago Board of Trade (CBT) is one of the major exchanges where these contracts are traded. Investors can trade various commodities on the CBT, including agricultural commodities, energy commodities, and metals.
Step-by-step explanation:
A commodity future refers to a financial contract that allows investors to buy or sell a specific quantity of a particular commodity at a predetermined price, with delivery and payment occurring at a future date. These contracts are traded on commodity futures exchanges, such as the Chicago Board of Trade (CBT), which is one of the major futures exchanges.
For example, suppose an investor wants to purchase crude oil at a specific price in the future. They can enter into a commodity future contract to buy a certain number of barrels of crude oil at that predetermined price. If the price of crude oil increases in the future, the investor can sell the contract for a profit.
The CBT, also known as the Chicago Mercantile Exchange (CME) Group, offers a range of commodity futures contracts, including agricultural commodities (such as corn and wheat), energy commodities (such as crude oil and natural gas), metals (such as gold and silver), and more. These contracts provide investors with opportunities to speculate on the future prices of these commodities and manage their exposure to price fluctuations.