Convergence

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Convergence

The movement of the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is usually higher because of time value. But as the contract nears expiration, and time value decreases, the futures price and the cash price converge. More generally, convergence trading involves taking two related assets that have different prices with the expectation that prices will converge (the cheaper asset is purchased and the more expensive is sold short).

Convergence

The fact that the futures price and the spot price for a given asset approach one another as a futures contract on that asset approaches maturity. At maturity, the two prices should be equal. The existence of convergence is the basis for the theory that forward rates equal future spot rates, though this idea is more controversial.

convergence

The process by which the futures price and the cash price of an underlying asset approach one another as delivery date nears. The futures and cash prices should be equal on the delivery date.
References in periodicals archive ?
CompTIA Convergence+ is being developed with the assistance of several leading organizations in the convergence market.
Westcon Group has particular expertise in the convergence of voice, data and video applications and technologies, including voice-over Internet protocol, or VoIP, security for networking and communications systems, remote access, Internet and e-business, virtual private networks, videoconferencing and wireless connectivity.
The convergence practice is being led by Lynn Smurthwaite-Murphy, vice president sales, WGNA and the security practice by Laurie Usewicz, vice president of security sales, WGNA.
This report provides very useful information not only to telecommunications companies and to device manufacturing companies, but also to broadcasters and MSOs who prepare for entering the convergence market.
In today's widely dispersed organizations, 3Com offers the most resilient architecture in the industry, not only for call processing, but for critical IP convergence applications," said Denis Aull, vice president of the Convergence Business Unit, 3Com.