Futures

Futures are agreements to buy or sell something at a specified price at a future date. Investors usually buy futures to β€œspeculate” on assets (for example, if an investor thinks the price of oil is going to go up, they might buy an oil future at a price agreed upon now – and if their prediction is correct they’ll be able to sell that future after the specified date for a profit) or to mitigate the risks of prices changing (for example, an airline may want to buy futures that allow it to buy oil at a future date but at a price agreed upon now to be able to better predict its costs).

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