This chapter covers futures contracts and some of their mathematics. We start
with a mention of cash contracts and a discussion of forward contracts, and
we present several examples of how these are used. We then move to a dis-
cussion of future contracts and explain how they differ and how future con-
tracts differ from forward contracts. We develop the equation for cost of carry
and present and explain the equations for the conversion factors for Treasury
security futures.
When you finish this chapter, you should understand the important fea-
tures of cash, forward, and futures contracts, the cost to carry a future, and
the ...
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