Chapter 9. Figuring in Financial Futures—Stock Indices, Interest Rates, and Currencies
The Boring But Necessary Basics
When most people think of commodities, they imagine fields of grain or bars of gold; however, not all commodities are grown or mined. A futures contract might be written on any commodity in which the underlying asset can be considered interchangeable, often referred to by the term fungible. In essence, fungible products are those for which an end user would have no preference in choosing one over another. In other words, you wouldn’t prefer one bushel of wheat over another. Assuming that the bushel meets the exchanges definition of a deliverable grade, wheat is wheat.
A commodity is any interchangeable product.
Most people ...
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