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 ?
Although the Wehco/CPI alliance is unique, Purvis said the trend nationwide is on "media convergency," and that's what's happening in northwest Arkansas.
2) the convergency of income per head to European averages, or lack thereof, so as to assess the growth prospects for new members of the EEC coming from the former Eastern Block.
In order to investigate the convergency of various value-measuring instruments, I once administered eight of them to the same population (Hofstede, 1980: 22).
These thematic descriptions can be utilized to understand value differences across cultures, cultural convergency and divergency, development of structure, negotiations, and numerous other dimensions of organizational processes.
Because of the factor a' ([z.sup.(i)]), the limitation of the equation (21) is that the gradient decreases with the increase of the error between target value and output value, and therefore slows down the convergency. To overcome this problem, we can discard this factor, a'([z.sup.(i)]), yielding
Analysis of Location Error Convergency. Location error convergence is the property that location errors of different iteration stages have the same tendency to the zero end state; that is, with the increment of iteration number, the value of location error gets smaller and smaller.
[x.sub.2max]] %from (21), (22) % abs(ea-ea)<1e-7 %recheck convergency if (no limitations) print i,x1 min(z1),x1, x1 max v1(z1,z2,x1,x2), x2 min(z2), x2, x2 max v1(z1,z2,x1,x2),a w,ea, [e.sub.E]); plotcr [T.sub.1]x1=[plotcr [T.sub.1]x1 ; x1]; plotcr [T.sub.1]x2=[plotcr [T.sub.1]x2 ; x2]; end %if--no_limitations end %if--bisection_converge end %for try plot(plotcr [T.sub.1]x1, plotcr [T.sub.1]x2); end catch err end The results from Table 1 are showing the raw data produced by the Matlab code.