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 in which an end user would have no preference of over one or the other. In other words, you wouldn’t prefer to have one bushel of wheat as opposed to another. Assuming that the bushel meets the exchanges definition of a deliverable grade; wheat is wheat.
A commodity is any interchangeable product.
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