Question

The "specifications" of a standardized futures contract describe the commodity or other asset covered by the contract and the amount of such commodity or asset to be delivered by the seller at expiration. The specifications can always be found at:___________.

Answer 1

The specifications of a standardized futures contract are found at the exchange where it is traded, detailing commodity or asset quality and quantity. Business contracts with inflation adjustments benefit buyers and sellers by setting a real price that considers inflation, making financial expectations more predictable.

Step-by-step explanation:

The specifications of a standardized futures contract can always be found at the exchange where the contract is traded. These specifications detail the commodity or asset, the quality and quantity of the asset to be delivered, payment terms, and the delivery date. For instance, a futures contract for oil would specify the type of oil, how many barrels would be delivered, and the location of delivery.

Regarding business contracts with provisions for inflation adjustments, these often include clauses that protect both buyers and sellers from unexpected fluctuations in inflation. Sellers are not tied to a low nominal price in times of high inflation, thus ensuring they don't lose purchasing power over time. Conversely, buyers are not stuck with a high buying price if inflation is lower than expected, allowing them to benefit from a lower real cost.

Such contracts aim to establish a real price that accounts for inflation over the life of the contract, which is beneficial for both parties. By agreeing on a real price, both the seller and the buyer can have predictable financial expectations despite the uncertain future path of inflation.

Answer 2

Answer: The specifications of future contracts can always be found on the website where the offer is made or in trading pits

Explanation: Futures contracts will always have their specifications as to the amount that must be offered, expiration date of the contracts, minimum quantities that can be purchased and other elements that can help us verify or work on these contracts.

The elements that make this type of contract generally mark a trend in which you can easily buy and sell for this type of contracts, becoming more liquid than bonds and other financial obligations.