glossary on trade financing terms f

F Face value: The value indicated on the face of a financial asset, e.g a US$100 Treasury Bill has a face value of US$100 Franỗais: Valeur faciale Espaủol: Valor nominal Factor cost: An accounting method whereby the value of output is measured on the basis of the cost of the factors employed in its production, rather than with reference to its market price The production factors considered in the measurement usually include land, labour, capital and enterprise Some textbooks, however, consider only the first three factors Franỗais: Facteur coỷt Espaủol: Costo de los factores Factoring: A technique which allows businesses (including trading companies) to discount Accounts receivable or other assets to obtain cash In factoring, the accounts receivable or other assets are sold at a discount on a daily, weekly or monthly basis to a factoring house Such an organization will assume title to the receivables or assets and will also bear all commercial and political risks connected with the transaction, without the right of recourse to the exporter in the event of default of the foreign buyer In practice, the factoring house purchases the trade credits of its client and handles the collection on the receivables on its own behalf Factoring may thus be a convenient option for firms without an effective collection department or which often discount their receivables Factoring houses usually require that they handle a large percentage of an exporter's business They tend to work with short-term receivables (up to 180 days), linked mostly to sales of consumer goods In general, factoring of foreign accounts receivable is less common than with domestic receivables Compare it with Forfaiting Franỗais: Affacturage Espaủol: Factorizaciún, descuento de facturas, gestiún de deudas descuento, factoring Factoring houses: These are companies specialised in the purchase of receivables at a discounted price, usually about 2-4 % lower than their face value Franỗais: Sociộtộs d'affacturage Espol: Empresa de factorización Factors of production: These are the elements which determine a country's output of goods and services They consist of land, labour, capital and enterprise, although some textbooks only consider the first three Variations in the availability of these factors and in the efficiency of their utilization influence a country's economic growth Franỗais: Facteurs de production Espaủol: Factores de producciún F.A.S.: See Free Alongside Ship Franỗais: F.A.S Español: F.A.S Federal funds: USA mandatory reserve assets deposited by US commercial banks at their district Federal Reserve Banks Franỗais: Fonds fộdộraux Espaủol: Fondos federales Federal funds market: This is the market within which several hundred US banks borrow or lend Federal funds, allowing banks temporarily short of reserves at the Federal Reserve Banks to borrow from banks which have excess reserves Franỗais: Marchộ des fonds fộdộraux Espaủol: Mercado de fondos federales Federal funds rate: The rate at which US banks will lend each other their surplus of reserves held with the Federal Reserve Banks The Fed Funds rate, as it is called, often indicates the direction in which U.S interest rates will move Franỗais: Taux des fonds fộdộraux Español: Tasa de los fondos federales, tipo de los fondos federales Federal Reserve System: Usually referred to as the Fed, this is the Central Bank of the United States It is governed by the Federal Reserve Board located in Washington, D.C and includes 12 district Federal Reserve Banks Franỗais: Systốme de la Réserve Fédérale Español: Sistema de la Reserva Federal Fees: Additional charges to be paid to lenders Sometimes referred to as Management fee, Negotiation fee or Agency fee Franỗais: Honoraires, Commissions Español: Honorarios, derechos F.I.: See Free In Franỗais: F.I Espaủol: F.I FIFO: See First in, first out Franỗais: FIFO Espaủol: FIFO Fiduciary deposits: A speciality of Swiss banking whereby the depositor’s funds are lent directly to a corporate borrower, while the risks remain with the depositor This technique benefits the bank, as the deposits remain off its balance sheets while the transaction yields a profit It is also advantageous for the depositor in terms of higher interest rates on lending Franỗais: Dộpụts fiduciaires Espaủol: Depúsito fiduciario, depúsito sin garantía Final delivery: A term indicating the date on which the final delivery is carried out Franỗais: Livraison finale Español: Entrega final Final dividend: The dividend paid out by a corporation at the end of the year (annual dividend) after quarterly, biannual or other interim dividends have been distributed during the year Franỗais: Dividende final Espaủol: Dividendo complementario Final maturity: The due date for the final repayment of the principal Franỗais: Echộance finale Espaủol: Vencimiento final Finance bill: A form of bill of Exchange issued without any direct connection to an actual business transaction It usually offers less security to the bank compared with a bill linked to a specific commercial transaction Finance bills frequently take the form of banker's acceptances and treasury bills issued by public authorities Franỗais: Effet financier Español: Letra de cambio financiera Financed portion: The portion of the total contract value or invoice after deduction of the down payments It serves as the basis for the calculation of the guarantee/insurance coverage, the risk retention and the guarantee/insurance fees Franỗais: Part financộe Espaủol: Porciún financiada Financial engineering: the process of creating, combining or dividing different financial instruments in order to achieve a specific financial objective within certain tax and legal constraints Franỗais: Ingộnierie financiốre Espaủol: Tộcnicas financieras Financial Futures: See futures Franỗais: Contrats financiers terme Español: Financial futures Financial loan; medium-term financing: A bank loan granted to domestic or foreign borrowers for a fixed amount and a fixed term, without linking the use of the loan to a specific commercial transaction Compare with Export financing credit Franỗais: Prờt financier, Financement moyen terme Espaủol: Crộdito financiero Financial markets: A general term indicating the wide array of markets where people buy and sell money and financial instruments Financial markets include markets in currencies, bonds, Treasury bills, equities, financial futures, options, bank deposits,commercial paper, etc Franỗais: Marchộs financiers Español: Mercado financiero Financial Times (FT) index: London's stock exchange indicator The index is published daily in the Financial Times newspaper The main FT index is the "industrial ordinary", which covers the movements in the shares of the thirty largest industrial companies A more widely based index has been developed by the Financial Times and the London Stock Exchange which is known as the Footsie, standing for FT-SE See also Dow Jones Index and Nikkei Index Franỗais: Indice du Financial Times Español: Indice del Financial Times Financing: Obtaining or supplying money or credit for an investment or trade purpose Franỗais: Financement Espaủol: Financiaciún, financiamiento Financing of month-end closing: This refers to borrowing in order to bridge temporary liquidity shortages at the end of the month Franỗais: Financement de bouclement de fin de mois Espol: Financiación para el cierre mensual F.I.O.: See Free In and Out Franỗais: F.I.O Espaủol: Franco de gastos de carga y descarga First in, first out (FIFO): An accounting method for evaluating a company's inventories (stocks) As the term indicates, FIFO assumes that stocked items are used, or sold from stock, in the order in which they arrived The LIFO method (Last in, first out) assumes that the newest items are used or are sold first Using the FIFO method stocks are valued at their original cost while LIFO values all stocks at current price As a result, FIFO tends to show a lower level of profits than LIFO because it excludes the gains from stock appreciation Franỗais: 1er entrộ -1er sorti (FIFO) Espaủol: (Mộtodo de) Primera entrada, primera salida; primero en entrar, primero en salir; PEPS; salida en el orden de adquisición; salida en el orden de entrada First loss: In case of damage, this is the amount which has to be borne by the insured and absorbed before any percentage refund payment is calculated Also called a deductible Franỗais: 1ốre Perte/Franchise Espaủol: Primer riesgo First of exchange: The original of a draft drawn in original and duplicate Franỗais: Premier de l'effet Espaủol: Primera de cambio Fixed advance: This a loan which must be repaid at an agreed due date (as a rule in weeks, months or months) or when called It is listed in the bank’s balance sheet under the fixed loans and advances heading Franỗais: Avance fixe Espaủol: Prộstamo fijo Fixed assets: A term indicating tangible assets such as real estate, buildings, land, plant and machinery, bought by the firm for long-term use rather than for resale or immediate consumption Increasingly, fixed assets include intangible assets such as patents, trademarks and customer recognition Fixed assets are retained in the business for long periods and a portion of their original cost will be written off annually against profits for amortization to reflect their diminishing value over time In the firm’s balance sheet fixed assets are therefore usually shown at cost, less depreciation charged to date It should however be noted that certain fixed assets, such as property, tend to appreciate in value The figures on the balance sheet thus need to be periodically revalued to keep in line with market values Franỗais: Immobilisations Espaủol: Activos fijos Fixed charge: A security or collateral given by a borrower to a lender, in the form of a claim on specific assets of the borrower should he fail to pay If the borrower goes bankrupt, only these specific assets may be taken over by the lender Compare with Floating charge Franỗais: Droit de gage fixe, limité Español: Cargo fijo Fixed costs: Costs which are fixed in total for a given period of time and for given production levels, such as factory rents or staff on contracts They cannot be altered in the short-term and are therefore a constraint on the immediate flexibility of the firm Franỗais: Coỷts fixes Espaủol: Costos fijos, gastos fijos Fixed-date bill: A bill of Exchange which becomes due and payable at a specified date after the issue date Also known as after-sight bill, it is frequently employed in international transactions Franỗais: Effet date fixe Español: Letra fecha fija Fixed exchange rate: A currency’s exchange rate which is officially kept fixed at a specified level over time or is allowed to float within a permitted margin of fluctuation The fixed level of the exchange rate is ensured by the Central Bank through purchases and sales of foreign reserves on the foreign exchange markets Franỗais: Taux de change fixe Espaủol: Tipo de cambio fijo Fixed exchange rate system: A system where the exchange rates of the participating currencies are tied to (i.e fixed in terms of) some common standard, such as gold, another country’s currency, a basket of currencies, etc Limited fluctuations from such common standards may be allowed, leading to an adjustable peg-rate system Examples of fixed exchange rate systems include the Bretton Woods agreement (1945-1973), whereby the U.S tied the dollar to gold, with other countries pegging their currencies to the dollar The European Monetary System is another example, within which the participants' currencies were allowed to float within a fluctuation margin fixed around the relative ECU rate Franỗais: Système de taux de change fixe Español: Sistema de tipo de cambio fijo Fixed-interest financial securities: Any financial security which has a predetermined fixed interest rate attached to its par value (such as Treasury bills, bonds, debentures, notes and preference shares etc.) The borrower of a fixedinterest financial security must pay interest at the set rate for its entire maturity For example, a debenture with a par value of £100 at 5% will pay out a fixed rate of interest of Ê5 per annum until maturity Franỗais: Titres financiers taux d'intérêt fixe Español: Valor de renta fija Fixed price: Usually used in the same sense as lump sum, but referring to goods rather than services It is a fixed sum, agreed at the signature of the contract, to be paid to the seller for the goods traded Franỗais: Prix fixe Español: Precio fijo Fixed rate loan/lending: A term loan for which the interest rate has been set at an agreed fixed rate for the entire life of the loan Franỗais: Prờt taux fixe / financement Espaủol: Prộstamo tipo de interés fijo may underwrite or reinsure the commercial risk FCIA acts as an agent responsible for the marketing and daily administration of the programme Franỗais: Association de l'assurance de crédit étranger Espol: Asociación de Seguros a Créditos en el Extranjero Foreign currency account: An account denominated in another countrys currency Franỗais: Compte en monnaie ộtrangốre Espaủol: Cuenta en divisas Foreign currency option: An option which gives the right to buy or sell a specified amount of foreign currency at a specified price within a specified period of time Franỗais: Option en monnaie ộtrangốre Espaủol: Opciún en divisas Foreign currency swap: A swap operation whereby a currency is traded against another currency, with the agreement that the transaction will be reversed at some specified future date Franỗais: Swap en monnaie étrangère Español: Swap en divisas Foreign direct investment (FDI): The purchase of foreign physical assets such as real estate, plant and equipment, involving the acquisition of a certain degree of management control FDIs are defined by the International Monetary Fund as "investments made to acquire a lasting interest in an enterprise operating in an economy other than of the investor, the investor's purpose being to have an effective voice in the management of the enterprise" The element of management control is what differentiates FDIs from mere portfolio investments Franỗais: Investissement étranger direct Espol: Inversión extranjera directa, IED, inversión directa extranjera Foreign draft: A draft drawn by a bank or another drawer on a bank or another drawee in a foreign country The draft may be denominated in any currency Franỗais: Traite ộtrangốre Espaủol: Giro extranjero Foreign exchange: A general term indicating foreign currencies A country earns foreign exchange by exporting goods and services Franỗais: Devises Espaủol: Divisas Foreign exchange contract: A contract between a bank and its client to purchase or sell foreign exchange at a fixed rate with delivery at a specific time It allows the client to protect himself from adverse fluctuations in foreign exchange rates Franỗais: Contrat de devises Español: Contrato en divisas Foreign exchange controls: Various forms of control imposed by government authorities on the purchase/sale of foreign currencies by residents, or on the purchase/sale of domestic currency by non-residents Franỗais: Contrụle des devises Español: Control de cambio Foreign investment: The purchase of assets (foreign direct investment) or securities (portfolio investment) abroad by a company or individual Franỗais: Investissement ộtranger Espaủol: Inversiún extranjera Foreign leasing: A leasing contract whereby the lessor is an entity domestic to the lessee’s country but owned by an entity located outside the lessees country Franỗais: Crộdit-Bail ộtranger Espaủol: Arrendamiento en divisas Foreign liabilities: Financial obligations towards foreign creditors, for example debts towards a bank located abroad Opposite: Foreign assets Franỗais: Dettes ộtrangốres Espaủol: Pasivos exteriores, pasivos en el exterior, deudas en cuenta extranjera, pasivos externos Foreign market value: The price at which merchandise is sold, or is offered for sale, on the main foreign markets of the country of export Franỗais: Valeur marchande ộtrangốre Espaủol: Valor en el mercado extranjero Foreign Sales Agent: An individual or a firm acting as the foreign representative of a domestic supplier for its sales abroad Franỗais: Agent de vente ộtranger Espaủol: Agente de ventas en el exterior Foreign Sales Corporation (FSC): A corporation which may be established by a US exporter to shelter some of his income from taxation Special tax treatment is granted if the FSC fulfils certain conditions, such as being a foreign corporation, maintaining an office outside US territory and having at least one director resident outside of the United States Franỗais: Sociộtộ de ventes lộtranger Espaủol: Sociedad de venta al exterior Foreign Trade Organizations (FTO): Agencies organized along product lines, responsible for handling foreign sales and purchases in most centrally planned economies Franỗais: Organisations de commerce extộrieur Espaủol: Organización de comercio exterior Foreign trade zones (FTZ): Special physical sites where firms are allowed by the government to delay or avoid paying tariffs on imports Domestic goods for export may be considered exported for excise tax rebates and drawback purposes upon entering the FTZ zone See also Export Processing Zones Franỗais: Zones de commerce avec l'ộtranger (FTZ) Espaủol: Zona franca Forex: Abbreviation for Foreign exchange Franỗais: Forex Espaủol: Forex Forfaiting: A form of non-recourse export financing, whereby the exporter sells the forfaiter its export receivables at a Discount, in exchange for cash Usually the receivables are guaranteed by a bank in the importer’s country, and sometimes also by the Central Bank or the government of the importer’s country Forfaiters typically work with Bills of exchange or Promissory notes, i.e unconditional and negotiable debt instruments Under this technique, the forfaiting company carries all the risks, with no right of recourse against the exporter in case of the failure of the importer to make due payment The exporter is enabled to extend credit terms to importers and will incorporate the discount into the selling price The main characteristics of forfaiting are:  Forfaiters work on the basis of single transactions  Forfaiters generally work with medium-term receivables (180 days to seven years)  Forfaiters usually work with capital goods, commodities and large projects It should be noted that, as forfaiters usually require a bank guarantee, they are generally willing to work with receivables from developing countries Compare with Factoring Franỗais: Escompte sans recours Español: Descuento de bonos a plazo medio; descuento de pagarés a plazo medio Formation of capital coverage: A financing technique used by insurance companies and pension funds, whereby the contributions of the insured parties are accumulated to form the capital required for the payment of insurance benefits Franỗais: Constitution de capital de couverture Espol: Formación de cobertura de capital Forward contract: A contract to deliver an asset (such as foreign currency, security, commodity, etc) at a specified future date and at a specified price Unlike futures, forward contracts are not standardized and are not traded on organized exchanges Franỗais: Contrat terme Espaủol: Contrato de futuros, contrato a término, contrato a plazo Forward dollars: The price of US dollars, for delivery at a fixed future date (e.g in months) Franỗais: Dollars terme Espaủol: Dúlar a futuro Forward (exchange rate) market: A market where traders, dealers and market makers purchase and sell foreign currencies for delivery or acceptance beyond the spot date Market expectations determine whether a currency forward rate stands at a premium (higher) or at a discount (lower) in relation to its spot rate Franỗais: Marché des changes terme Español: Mercado de futuro Forward rate: A contractually-established exchange rate between a foreign exchange trader and the client for delivery of foreign currency at a specific date in the future It is the price applicable for a future transaction or on the future markets Opposite: Spot rate Franỗais: Taux terme Espaủol: Tipo de interộs futuro, tasa de interés futura Forwarder's receipt: The certificate issued by a forwarding agent confirming the receipt of goods for shipment It is not a security but it is often necessary for the execution of a documentary credit Franỗais: Rộcộpissộ du transporteur Español: Recibo de la agencia de transporte Foul Bill of Lading: A receipt issued by a carrier indicating that the goods were damaged when received Compare with Clean Bill of Lading Franỗais: Connaissement avec rộserve Espaủol: Conocimiento de embarque sucio F.P.A.: Free of Particular Average Franỗais: F.P.A Espaủol: Libre de avería particular, libre de avería simple Fractional reserve: The reserve held by banks as a precautionary measure The sums devoted to reserves are generally much lower than the amounts loaned and re-loaned to borrowers Franỗais: Rộserve partielle Espaủol: Reserva fraccionaria Franchising: A sales and distribution method whereby one party (the franchisor) gives an independent party (the franchisee) the authorisation to distribute his products or services under an established name This is not a branch of the franchisor's business, but a separate business under the original trademark and business concept The franchisor provides continual assistance to the operation of the franchisee network in order to ensure that their activities conform to the agreed standards Franỗais: Franchisage Espaủol: Franquicia Free (of charge): See Freight prepaid Franỗais: Libre de frais Español: Free of charge Free Alongside Ship (F.A.S.): A term commonly used in international trade contracts indicating that the quoted price by the seller includes insurance and charges for delivery of the goods alongside a designated vessel at the port of departure The seller bears the costs of unloading and wharfage, whilst loading, ocean transportation and insurance costs are left to the buyer F.A.S is also a reference for export and import valuation Franỗais: Franco long du bateau Espaủol: Franco al costado del buque (FAS) Free carrier: This indicates that the seller’s obligations are fulfilled upon delivery of the goods, cleared for export, to the carrier named by the buyer at an agreed shipping place If no precise place is indicated by the buyer, the seller may select from a stipulated range of places where the carrier should take the goods into his charge This term may be used for any mode of transport, including rail, air and multimodal transport When, according to commercial practice, the seller provides assistance to organise the transport of the goods by a carrier, he may act at the buyer's risk and expense Franỗais: Franco transporteur Español: Franco transportista Free in: A pricing term indicating that the charterer of a vessel is responsible for the cost of loading the merchandise onto the vessel Franỗais: Free in Español: Franco de gastos de carga Free in and out: A pricing term indicating that the charterer of a vessel is responsible for the costs of loading and unloading goods from the vessel Franỗais: Free in and out Español: Franco de gastos de carga y descarga Free of Particular Average (F.P.A.): A clause used in marine insurance relating to the recoverability of partial and total losses from perils of the sea The American and English coverage vary as follows: (1) American Conditions (FPAAC) The underwriter does not assume responsibility for partial losses unless caused by sinking, stranding, burning or collision with another vessel (2) English Conditions (FPAEC) The underwriter assumes responsibility for partial losses if the vessel is sunk, stranded, burned, on fire or in collision, even though such an event did not actually cause the damage suffered by the goods Compare with All Risks Coverage and With Average Franỗais: Libre davarie particuliốre Espaủol: Libre de averớa particular, libre de avería simple Free on Board (F.O.B.): Under this term, the price of the good quoted by a seller includes transport, insurance and loading costs incurred until the merchandise is loaded on board the ship The seller fulfils his obligations when the goods are boarded (i.e have passed over the ship’s rail) at the named port of shipment The buyer has to bear all costs and risks of loss or damage arising from the point of loading The term FOB can only be used for sea or inland waterway transport When the ship’s rail serves no practical purpose, such as in the case of roll-on/roll-off container traffic, the Free Carrier term is more appropriate FOB values also serve as a reference for import and export valuation Franỗais: Franco bord (F.A.B.) Español: Franco a bordo (F.O.B.) Free on rail/free on truck: Contractual terms used when the goods are to be carried by rail ("trucks" refers to the railway wagons) Franỗais: Franco sur rail / Franco sur wagon Espaủol: Franco en vagón Free out: A pricing term indicating that the quoted price is inclusive of the costs of unloading the goods from the vessel Franỗais: Free out Espaủol: Franco de gastos de descarga Free port: An area of the port where merchandise may legally be unloaded and stored duty-free, pending reexport or sale within that country Franỗais: Port franc Espaủol: Puerto franco Free Trade Area (FTA): A regional trade agreement integration whereby tariffs on trade between member states are abolished, but participants maintain their own external tariffs towards imports from countries outside the area Compare to Custom Union Franỗais: Zone de libre échange Español: Zona de libre comercio, zona franca Freight/Carriage paid to: A contractual term indicating that it is the seller who pays the freight for the carriage of goods to the named destination Any additional costs and the risk of loss or damage to the goods are transferred from the seller to the buyer when the goods are delivered into the custody of the first carrier, and not at the ship's rail The term may be used for all modes of transport Franỗais: Fret, transport payộ Español: Flete pagado hasta, porte pagado hasta Freight/Carriage… and insurance paid to: A term indicating that, in addition to the "Freight/Carriage paid to" obligations, the seller also has to undertake transport insurance against the risk of loss or damage to the goods during carriage It is thus the seller’s responsibility to establish a contract with the insurer and to pay the relevant premium Franỗais: Fret/Transport et assurance payộs Español: Flete y seguro pagado hasta, porte y seguro pagado hasta Freight collect: A term used on shipping documents and in price quotations indicating that the buyer or consignee must pay all shipping charges Franỗais: Port avancộ Espaủol: Flete debido, porte debido Freight Forwarder: An independent service company which specialises in the handling of export shipments on behalf of the exporter, remunerated on a fee basis The forwarder provides services to facilitate the expedition of the shipment to its overseas destination, such as preparing the shipping documentation, counselling the exporter when applying for trade financing, booking and arranging space for shipments, arranging cargo insurance, advising the shipper on overseas requirements on marking and labelling, etc Franỗais: Transitaire Espaủol: Agente de transportes, agente expedidor Freight prepaid: A term used in price quotations showing that the seller has paid the costs of freight from one named point to a second named point, but that the title to the shipment passes to the buyer at the first named point Franỗais: Fret payộ davance Español: Flete pagado por anticipado FRN: Abbreviation for Floating rate note Franỗais: FRN Espaủol: FRN Front end costs: Commission fees or other payments, taken at the outset of a loan or other financial operation Franỗais: Frais payộs au dộbut Espaủol: Costos iniciales Front end finance: In international trade transactions, a commercial loan provided to the buyer, under which separate credit facilities are provided to finance down payment and/or other direct payments not covered under buyer credit or supplier creditfinancing Franỗais: Financement au dộbut Espaủol: Financiaciún suplementaria, financiaciún sin garantớa, financiación sin asegurar Full convertibility: A situation in which both residents and non-residents can purchase unlimited amounts of any currency Franỗais: Convertibilitộ totale Espaủol: Convertibilidad total Full service bank: A bank operating in all banking sectors See also: Mortgage bank Franỗais: Service bancaire complet Espaủol: Banco mỳltiple, multibanco Full set: Term used in a documentary credit transaction for a bill of lading which has been drawn up in three original copies Franỗais: Jeu complet Espaủol: Conjunto completo Functional currency: The currency of reference when converting a group’s financial statements expressed in different foreign currencies It is typically the currency of the country where the firm has its base or core operations Franỗais: Monnaie de rộfộrence Espaủol: Moneda funcional Funds: (1) Cash or other assets easily convertible into cash which have been set aside or reserved for a particular purpose, such as the pension fund of a company (2) Abbreviation for investment funds Franỗais: Fonds Espaủol: Fondos Futures; Future transactions: A type of derivative, represented by contracts for the sale or purchase of an agreed quantity of a specified asset, for delivery at a specified future date and at a predetermined price The assets underlying a futures contract may be represented by commodities, foreign exchange, shares and other securities When commodities are used in futures trading they are not intended to be delivered physically (although this is not ruled out) but entail the settlement of price differences Trade in financial futures is standardised and takes place on specialized markets such as the Chicago Board Options Exchange (CBOE), the New York Futures Exchange (NYFE) and MATIF Compare with forward contract See also option Franỗais: Opộrations terme Espaủol: Futuros, futuros financieros, operaciones a término Futures market or forward exchange market: A market where commodities (rubber, tin, etc.), foreign currencies and securities are bought and sold for delivery at some future point in time, as opposed to the spot market which provides for immediate delivery Unlike the spot market, where commodities are traded in the physical sense, on the futures market it is only the contracts which are bought and sold While traders in commodities, or financial assets whose price fluctuates greatly over time, may engage on the forward/futures market in order to minimize risk and future uncertainty (i.e hedge against adverse price movements), dealers and speculators so hoping to earn profits from correctly anticipating price movements e.g a producer of chocolate may buy a future on a given amount of cocoa at today's price, plus a percentage risk premium, for delivery in two months' time Even if cocoa prices rise steeply, the manufacturer will still able to buy at the contract price and can therefore plan his raw materials accordingly Similarly, cocoa growers can contract to sell the commodity at an agreed current price for delivery in the near future in order to protect themselves from adverse price changes Franỗais: Marché terme Español: Mercado de futuros ... referred to as Management fee, Negotiation fee or Agency fee Franỗais: Honoraires, Commissions Espaủol: Honorarios, derechos F. I.: See Free In Franỗais: F. I Espaủol: F. I FIFO: See First in, first... Abbreviation for investment funds Franỗais: Fonds Espaủol: Fondos Futures; Future transactions: A type of derivative, represented by contracts for the sale or purchase of an agreed quantity of a specified... of roll -on/ roll-off container traffic, the Free Carrier term is more appropriate FOB values also serve as a reference for import and export valuation Franỗais: Franco bord (F. A.B.) Español: Franco