Commodity Paper

Categories: Trading, Derivatives, Stocks

You may have written one in an econ class at some point. But we're talking about a different kind of paper here.

If you get a mortgage, you are getting a loan backed by collateral: your house. Using collateral (like a house for a mortgage) represents fairly common practice in the lending business. Ideally, a lender wants something to back up the loan, some item of value to provide security that the loan will get paid back.

Commodity paper is a specific form of collateral. It's a loan backed by some amount of a commodity...a bunch of barrels of oil, a silo full of grain, etc. The commodity provides the collateral for the loan.

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Finance: What Are Commodities?74 Views

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Finance allah shmoop What are commodities This is a comm

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owed And this is my monnet ease And neither of

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them have anything to do with commodities though if you

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say them fast enough well you'll never mind A commodity

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is something that is common like it's everywhere See the

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com o there for the big hand Like gold is

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a commodity it's everywhere oil is a commodity it's everywhere

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seven hundred fourteen page paperback copy of moby dick is

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a commodity and yes we can't resist clueless politicians are

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a commodity as well Well a commodity is basically the

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same thing no matter where and how you buy it

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That copy of moby dick is the same copy whether

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you get it at your local bookstore If a physical

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book stores even exist anymore or on amazon the serial

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killer of those aforementioned book stores So if something is

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the same everywhere well what would be the opposite Well

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how about a swim lesson from michael phelps You know

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you can't buy that on amazon Not yet anyway Or

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say you want to be the proud owner of a

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three headed dog Well you might be able to find

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one somewhere but it's going to cost you a whole

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lot of kibble Or what if you were looking to

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buy a blouse like one that was worn by j

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edgar hoover Well those are pretty uncommon and or unique

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commodities Well the basic idea is that most commodities can

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be sold by lots of people so their profit margins

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are generally low They may sell an extreme volume but

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if you have thirty people competing to sell you that

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same copy of moby dick don't don't you think the

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last guy just desperate to get it off his shelves

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will drop the price really low and you'll take it

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Yeah unfortunately then you have to read that book That 00:01:41.357 --> [endTime] book really will be your way

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