Define the following terms as they pertain to futures markets: speculator, hedger, long position, short position,...

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Define the following terms as they pertain to futures markets:speculator, hedger, long position, short position, spot market,margin, margin call. Suppose a bond dealer wants to hedge itsinventory of Treasury bonds. The dealer is holding $15 millionworth of T-bonds with a modified duration of 15 years. The futurescontract, currently priced at 161, has a modified duration of 18years. Compute the number of contracts required to hedge theposition, indicate whether you would go long or short, and explainhow the hedge works

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AnsDefinition of Followingterms as per the futures marketSpeculator A Speculator canbe any individual or firm that accepts risk in order to make aprofit They are the primary participants in the futures marketSpeculators achieve their profits by buying low and selling highBut in the case of futures market the scenario is bit different asthey sell first and later buy at a lower priceHedgerHedger is any individual or firm that buys or sells the realphysical commodity They are the primary participants in thefutures marketHedgers can be producerswholesalers manufacturersor retailers they See Answer

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Define the following terms as they pertain to futures markets:speculator, hedger, long position, short position, spot market,margin, margin call. Suppose a bond dealer wants to hedge itsinventory of Treasury bonds. The dealer is holding $15 millionworth of T-bonds with a modified duration of 15 years. The futurescontract, currently priced at 161, has a modified duration of 18years. Compute the number of contracts required to hedge theposition, indicate whether you would go long or short, and explainhow the hedge works