Cash and Carry Transaction
Cash and Carry in the stock market is not the same thing as paying cash for your groceries and then carrying them home. Rather, it refers to taking advantage of a great price in the commodities market that happens to be below the futures contract price.
Also known as base trading, let’s say Pork Bellies Inc.’s stock is trading at $50 per share on the stock exchange, but is posted at $60 per share on the futures exchange. The savvy trader immediately buys the stock at $50 and then “shorts” (locks in) the futures price at $60 per share. The trader keeps the stock until it is due according to the short futures contract. The difference between the spot (cash) price and the futures price ($10) provides the profit, less any fees or other costs. But in the computer age, these price discrepancies are usually caught quickly and changed.
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Finance: What is a Credit Limit?39 Views
Finance, a la shmoop. What is a credit limit? Alright people well simply put the
maximum amount you get to charge or use on a loan or credit account, that's a [Credit limit definition written on a 100 dollar bill]
credit limit. So yeah it's that thing that keeps toddler Joey from ordering
two hundred thousand dollars worth of Snickers bars. [Toddler looking at the snickers bar]
If you accidentally you know leave out your Amex. (Illustrative example time) If you have a ten thousand
dollar line of credit or credit card you can't spend $20,000 on a trip to Vegas,
sorry. You might be able to go on a smaller trip to Atlantic City but once [Picture of Atlantic City]
you hit that 10 grand well the party's over until you pay some of that money [$10,000 flashing in red]
back, and by the way taking that smaller trip and then putting everything on red [Chips landing on a roulette table]
22 in hopes of funding your next trip to Vegas? Probably not the soundest
financial planning... sorry, let's keep it real. [Guy putting on a serious face]
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