What is the difference between commodities and financial futures?

General Questions:

Respond to the following questions thoroughly, in 150-300 words for each question. Use your textbook as your first and major reference.

1. Explain what an option entails, and why an investor may be attracted to this type of investment. Where are options traded? 2. What is the difference between commodities and financial futures? What are the risks and the benefits of each? 3. In a declining economy and housing market, what are the benefits or opportunities for the investor in this type of real estate market? What are the risks?

he Sure Grip Tire Company produces tires of various sizes and shapes. The demand for tires tends to follow a quarterly seasonal pattern with a trend. For a particular type of tire the company’s current estimates are as follows: a. The company has just observed the first quarter of demand D1 = 6000 and would like to update its forecast for each of the next four quarters using α = β = γ = .4. b. When demand is observed for the second quarter, it is D2 = 15,000. How much error is there in the forecast? c. Update the forecasts again for the coming year, using the second-quarter demand data.

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