The assignment deals with the question whether derivatives harm society as a whole. The central issue is a possible impact of derivatives prices on present prices for agricultural commodities. In order to provide the necessary background knowledge, the terms derivatives, varieties, valuation, market participants and principles of operation are explained. After recognising theoretical knowledge and the results of different studies, it turns out that there is no empirical evidence for plausible harming impacts of over speculating index investors. Further studies have to be conducted in future in order to provide a reliable proof for policy makers.
Table of Contents
1. Introduction
2. Derivatives Defined
3. Types of Derivatives
3.1 Forwards
3.2 Futures
4. Conceptual Insights and Valuation
4.1 Main Mechanisms of a Futures
4.2 Valuation Concept
4.3 Relationship between Spot Markets and Futures Markets
5. Markets, Participants and their Intentions
6. Derivatives on Agricultural Markets and their Impacts
6.1 Market Characteristics
6.2 Analysis of the Link to Increased Food Prices
6.3 Conclusion
7. Result and Critical Appraisal
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