One specialized type of security is called an equity futures. This is a contract that guarantees you a share of a particular company to be delivered to you not today, but sometime in the future, at a price that is determined by the market right now. This price is usually called the futures price of the stock (note – the term is plural – “futures”). If you ‘buy’ this futures, you don’t pay for the shares now. You are actually signing a contract whereby you are committed to pay that price in a particular date in the future, and you are guaranteed to receive one share of the company at that time, irrespective of its actual market price at that future date. Suppose for example that the futures price of the XYZ company is $40. Suppose you ‘buy’ a 6-months futures contract. If six months later the share pri
ce is $45, you gain $5 per share. If the market price in 6 months is only $35, then you lose $5. Using the take a look at the five year chart for your reference company (the one you chose for SLP1). Using this chart and other information you can find on this company, write a paper answering the following question: Do you expect the price of the shares in one year to be much higher? Or lower? Or only a little bit higher? How risky the stock is. Is its price prone to wild swings up and down? Or has the price been relatively stable the last few years? What alternative investments you have access to. What rate does your bank give you on a savings account or certificate of deposit? The greater return you can get on other investments, the less you would be willing to pay for an equity future. The Company I chose is facebook