[ Pdf The Economic Function of Futures Markets ✓ eastern-africa PDF ] by Jeffrey C. Williams Þ g-couture.co.uk

[ Pdf The Economic Function of Futures Markets ✓ eastern-africa PDF ] by Jeffrey C. Williams Þ This Book Offers An Explanation Of Why Commodity Processors And Dealers Use Futures Markets It Argues That They Use Futures Contracts As Part Of An Implicit Method Of Borrowing And Lending Commodities, Contrary To The Accepted View Of Dealers Averse To The Fluctuating Value Of Their Inventories Wanting Insurance Against Price Risk Employing Models Developed To Explain The Demand For Money, This Book Demonstrates That Risk Neutral Dealers Have Sufficient Reason To Use Futures Markets Moreover, The Book Exposes Major Internal Inconsistencies In The Accepted Explanation Rather Than Insurance Markets, The Appropriate Analogy Is The Money Market, Which Is The Point The Book Establishes Through Discussing Actual Loan Markets In Commodities This Insight Into The Function Of Futures Markets Is Then Used To Explain How Futures Prices For Different Delivery Dates Express A Term Structure Of Commodity Specific Interest Rates And Why Futures Markets Flourish For Some Types Of Commodities And Not For Others I find it incredible how many finance books explain futures markets with the fairy tale about a farmer and a miller reducing risk by fixing a forward price This is historical nonsense, no farmers were involved in the creation of futures markets, in fact farmers have historically been opposed to them It is empirical nonsense, farmers have never been major participants and when they do trade they are likely to be long than short Commodity processors are large participants, but they are likely to be short than long It is also logical nonsense, as a moment s thought on the topic will reveal and most daming, it is inconsistent with pivotal economic importance of these markets and explains nothing about their structure or character.
This was the first book to present a logical view of futures markets, backed up by theory and evidence It describes markets that were a fundamental break from, not a minor enhancement of, to arrive markets which have existed in one form or another wherever there is agriculture and exchange It explained the importance of derivatives long before less astute economists noticed them.
Although there have been advances in many of the specific issues covered, this book remains the best foundation for non nonsensical understanding of futures and other derivatives.