Give an Overview of Three of the Financial Futures Contracts

question 45

Essay

Give an overview of three of the financial futures contracts traded on the ASX.In your answer, discuss the features of the contracts you have selected and explain how the contracts may be used by both speculators and hedgers.

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Definitions:

Speculative Bubble

A situation in financial markets where asset prices are driven by exuberant market behavior, greatly exceeding the asset's intrinsic value.

Fundamental Value

Fundamental value is the intrinsic worth of an asset, determined through financial analysis of its underlying factors including earnings, dividends, and growth prospects.

Risk-Return Tradeoff

The principle that potential return on investment increases with an increase in risk.

Average Return

The mean amount of profit or loss generated by an investment over a specific period.