Lecture 10 presents the Theory of 
Normal Backwardation (Keynes) and the Theory of Price of Storage 
(Working) - explain how the prices for different delivery months are 
related and, in turn, the relationship to the spot price.<br>

ARE139: Lecture 11, Fall 2015

This course focuses on the institutional structure and economic functions of futures and options markets. Price formation in both commodity (e.g., corn, crude oil, cotton, and cattle) and financial (e.g., Eurodollar, Treasury Bonds, and stock indexes) futures and options markets will be examined in detail. The theory and practice of hedging will be explored in depth. Additional topics include: the theory of inter-temporal price formation for commodities and financials, common approaches used to forecast prices, statistical analysis of historical price behavior, and futures and options market regulation.