BUS 418 Class Notes Chapter 3

Dakota State University
BUS 418 Financial Futures & Options
Spring 2001

Class Notes
Chapter 3

All notes are in Word format.

Transparency Number	Title
1, 2	Futures Terminology
3	Sample Futures Quotes
4	Price vs. Value
5	Open Interest and Volume, Table 3.1
6	Patterns in Open Interest and Volume, Figures 3.2 and 3.3
7	The Basis
8	Converging Cash and Futures Prices, Fig. 3.4 Convergence of the Basis to Zero, Fig. 3.5
9, 10	The Formation of Spot Prices
11	Diagram: How Spot Prices are Determined
12	Value of a Futures Contract
13	Diagram: How Futures Prices are Determined
14, 15	Cost of Carry
16, 17, 18	The Formation of Futures Prices
19	Convenience Yield
20	The Behavior of Futures Prices
21-25, 27	Futures Prices and Risk Premiums
26	Patterns of Futures Prices, Fig.3.10