the bond market). In this way they attempt to protect themselves against the risk of an unfavorable price change in the interim or hedgers may use futures to lock in an acceptable margin between their purchase cost and their selling price(Castle Trading)
A perfect example of how the futures trading works is provided in the agricultural form of commodities. For example, a food manufacturer will need to buy additional corn from his supplier in three months. However, he feels that the price of corn is going to increase by the time he needs the corn in three months. Because of fierce competition, he needs to hold his price constant. He wants to make sure that he pays $3.55 per bushel. Therefore, to lock in the $3.55 per bushel price, he buys a contract for th
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