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Cash (Spot) contracts

Discuss Cash (Spot) contracts within the Financial Management forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; Any purchase of a commodity for cash is known as a cash contract or spot contract. Purchase by credit, under ...

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Sunanda K. Chavan
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Cash (Spot) contracts - October 19th, 2010

Any purchase of a commodity for cash is known as a cash contract or spot contract. Purchase by credit, under which the payment is made after a certain number of days in future also come under cash (spot) contract.
Cash contract can be based on a fixed or negotiated price, a price index or the price fixed by an exchange based on demand and supply for the commodity.

A typical characteristic of commodity cash (spot) contracts is that most of them are settled by cash with out actual delivery of the commodity, but a handful of them end up as physical delivery contracts.

The prices in the spot market are also used to decide the prices of the derivatives markets.
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