A derivative in which the underlying is natural gas. An example is the natural gas futures contract which is traded on NYMEX and physically settled by delivery of 10,000 million British Thermal Units of natural gas ratably over the contract month. Financially settled contracts are also available (natural gas basis contracts), in which settlement is made on the difference between a specific price index and the final settlement price of NYMEX natural gas contract.
Derivatives
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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