Jim Cramers Real Money Sane Investing In An Insane World
THE IMPORTANCE OF STANDARDIZATION
As stated previously the Chicago Board of Trade's adoption of standardized contracts for delivery of grain in 1865 marked the birth of the modern futures contract. While forward contracts can be written for any quantity of any commodity for delivery at any time the two parties desire, futures contracts are rigidly defined.
Futures exchanges establish all the key parameters of a contract. They define its size, the specific grade and class (U.S. No. 2 yellow corn, 30-year U.S. T-bonds) of the underlying commodity or product, the month that delivery will take place, and the time period within that month when delivery can occur. The exchanges also determine where delivery can take place.
For example, a Chicago Board of Trade corn futures contract sets terms for delivery of 5,000 bushels of U.S. No. 2 yellow corn to be delivered to an exchange-approved clearinghouse. Available delivery months are March, May, July, September, and December.
STANDARDIZATION SIMPLIFIES AND EXPEDITES PRICE DISCOVERY
By defining all the key characteristics of the commodity or product to be delivered, buyers and sellers need only worry about how many contracts they want to trade and at what price. When a customer phones the broker and places an order to buy two contracts of corn for December delivery, the broker needn't worry what type of corn is wanted or where it will be delivered. All orders flowing into the corn pit are for the same commodity. There's nothing left for the traders to shout about other than the price. Rich Dad Poor Dad Robert Kiyosaki
Rich Dad, Poor Dad
Lesson One: The Rich Don't Work For Money
Lesson Two:Why Teach Financial Literacy?
Lesson Three: Mind Your Own Business
Lesson Four:The History of and The Power of Corporation
Lesson Five:The Rich Invest Money
Lesson Six:Work to Learn - Don't Work for Money
Overcoming Obstacles
Getting Started
Still Want More? Here are Some To Do
How To Pay for a Child's College Education for $7000
About the Authors-Robert T. Kiyosaki, Sharon L. Lechter
