What are Futures Contracts? - Definition & Examples


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What is a derivative?

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1. What is the term for the 'something else' that determines the price of a derivative?

2. Which of the following are required for a futures contract to exist?

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About This Quiz & Worksheet

Futures contracts help buyers and sellers establish prices and product quantities for non-immediate transactions. The quiz gauges your understanding of how futures contracts work as well as key terms related to this topic.

Quiz & Worksheet Goals

During the quiz you will:

  • Define derivative
  • Identify what derivative prices are based on
  • Describe what is required in order to establish a futures contract
  • Give the term for when futures contracts or other derivatives are used as a shield against rising prices
  • Select a true statement about futures contract settlements

Skills Practiced

  • Defining key concepts - ensure that you can correctly describe key terms, such as derivative
  • Information recall - access your understanding to explain the components needed for a futures contract to exist
  • Knowledge application - utilize your knowledge of lesson definitions to give the term for protecting against rising prices

Additional Learning

Discover more about this subject with the lesson called What are Futures Contracts? - Definition & Examples. The lesson is centered on the following objectives:

  • Define futures contract
  • Understand real-world examples of futures contracts
  • Describe the differences between physical and cash settlements