Guide to Analysing Companies

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FUND MANAGER
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fallible methods to assess the risk of investing in certain
markets and types of shares. One of the best ways of spread-
ing risk is to diversify your investment.
Fungible
The quality of things like notes and coins where any one spec-
imen is indistinguishable from any other. A person owed $1
does not bother which particular dollar note he or she receives,
even if it is crumpled or frayed at the edges. Anything to be used
as money (be it cowrie shells, beads or gold pieces) has to be
fungible.
Futures
Contracts to buy something in the future at a price agreed in the
present. First developed in agricultural commodity markets,
such as those for wheat or pork bellies, futures then spread into
financial markets. There are now futures in such things as gov-
ernment bonds, stockmarket indices and even bank de-
posits. Futures (and options) markets have added greatly to
the liquidity of financial markets. By selling futures banks
can spread the risk they take on from lending; and investors
can assume the same risk by buying contracts in the
futures markets. Futures (and options) have also found it easier
to cross borders than the physical security or commodity that
underlies them. So, for example, futures contracts on European
indices are routinely traded in the United States whereas the un-
derlying securities are not.
There has been fierce competition among financial
centres to become the world’s leading futures markets. Tradi-
tional centres have not had it all their own way. Chicago has
given New York a run for its money; Frankfurt has challenged
London; and in East Asia Singapore has sometimes beaten Hong
Kong. Increasingly, specialist companies such as Euronext.liffe,