Posts Tagged ‘Speculation’

Hedging

An investment strategy to limit risk. For example, a farmer might sign a derivative contract to sell wheat harvested later in the year at an agreed price, in order to limit the risk taken as a result of price changes between the time of planting and harvesting. Hedging in this sense is a form of […]

Futures

A future is a contract to buy or sell a specified asset at an agreed price and date in the future. In this respect, it is similar to a forward trade. However, these two types of derivative are traded in very different ways. Whereas forward contracts are negotiated over-the-counter between two parties according to specifically […]

Financialization

Financialization refers to the ever greater role that capital markets play in our lives. At an individual level, this has been accompanied (or driven) by the concentration of wealth in the hands of a small financial elite, the social effects of which were partially managed by debt-fueled consumption (and more widespread share ownership) in industrialized […]

Credit Default Swap (CDS)

An insurance policy or bet on whether a company or country will default on a loan or bond, which pays out in the event that the company against which it is secured goes bust. The purchaser of a CDS pays a regular fee to the seller at regular intervals. If the borrower or bond issuer […]