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Arbitraging futures contract | Finance & Capital Markets | Khan Academy

Video vocabulary

back

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US / bæk /

UK / bæk /

A1
  • adjecitve
  • Farthest from the front e.g. in a classroom
  • adverb
  • Have returned to a place you were before
  • noun
  • The part of a chair that the upper body leans upon
  • Location at the rear of something
  • The reverse of side something
  • Area on the rear of your body
  • verb
  • To bet money on something
  • To go backwards in a car
  • To support and encourage someone or some cause

owe

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US / əʊ /

UK / o /

A2
  • verb
  • To need to do something in return for a favor etc.
  • To credit someone or thing for making it possible
  • To have a commitment to pay someone for something

from

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US / frəm /

UK / frʌm, frɑm,frəm /

A1
  • preposition
  • Starting at a particular place, time or level

call

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US / kɔ:l /

UK / kɔl /

A1
  • noun
  • A order or request for action
  • The sound an animal makes, often when in danger
  • A correct prediction, e.g. a decision in a game
  • A short visit to a place or person
  • A decision by a referee or umpire in a game
  • verb
  • To make a request or order for action
  • (Animal) to make sounds to warn of danger
  • To announce the date of an election
  • To make a judgment about something
  • To give someone or something a name
  • To guess in advance the result or outcome
  • To visit a place or person for a short time
  • To phone someone
  • To speak, announce or shout in a loud voice

think

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US / θɪŋk /

UK / θɪŋk /

A1
  • verb
  • To have an idea about something without certainty
  • To have an idea, opinion or belief about something

anything

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US / ˈeniθɪŋ /

UK / ˈɛniˌθɪŋ /

A1
  • pronoun
  • A thing of any kind

keep

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US / ki:p /

UK / kip /

A1
  • noun
  • Large, strong tower in the middle of a castle
  • Money spent on you so you can live in a place
  • verb
  • To continue doing something; not to stop
  • To stop balls going in a goal in sports
  • To not give back or return something
  • (Of food) to not spoil or not rot
  • To take possession of something to own, e.g. a pet
  • To have and continue to hold something
  • To do something that you have promised or agreed
  • To stay in a certain place or condition
  • To maintain the rules

another

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US / əˈnʌðə(r) /

UK / əˈnʌðɚ /

A1
  • adjecitve
  • One more, but not this
  • determiner
  • One more added
  • pronoun
  • One more (thing)

money

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US / 'mʌnɪ /

UK / ˈmʌni /

A1
  • noun
  • Coins or notes we use to pay for things

hey

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US / heɪ /

UK / he /

A1
  • exclamation
  • What you say when you want someone's attention

and

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US / ənd /

UK / ənd, ən,ænd /

A1
  • conjunction
  • Used to refer to two or more things
  • Plus; in addition; on top of that
  • Used to introduce an action that follows another

out

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US / aʊt /

UK / aʊt /

A1
  • adverb
  • No longer stylish (e.g. fashion)
  • Away from home, business, or the usual place
  • In a direction/movement away from inside or center
  • noun
  • Act when a batter cannot continue playing
  • verb
  • To tell people a secret

like

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US / laɪk /

UK / laɪk /

A1
  • adjecitve
  • Being equal in status or kind to something else
  • Similar; the same
  • adverb
  • For example
  • preposition
  • Used as a filler; used to ad emphasis
  • In a way similar to the way something is done
  • Such as; for example
  • verb
  • To want to
  • To find something pleasing; to prefer something

delivery

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US / dɪˈlɪvəri /

UK / dɪˈlɪvəri, -ˈlɪvri /

A2
  • noun
  • Way someone acts when speaking publicly
  • Act of taking something to a person or place

voiceover

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US / 'vɔɪsˌəʊvə /

UK / ˈvɔɪsˌovɚ /

A1
  • noun

get

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US / ɡet /

UK / ɡɛt /

A1
  • verb
  • To become affected by illness or disease
  • To begin to feel or understand an emotion or idea
  • To send or bring someone or something home, etc.
  • To go somewhere to obtain something
  • To (cause to) do a particular thing
  • To obtain, receive or be given something
  • To currently have
  • To prepare for use
  • To understand something being said or read

what

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US / wɒt /

UK / hwɑt, hwʌt, wɔt, wʌt,hwət, wət /

A1
  • pronoun
  • Thing or things that; the same kind as
  • Used to emphasize something you are about to say
  • adjecitve
  • Used to refer to a particular amount, or number
  • Used to place emphasis on a particular quality
  • adverb
  • To a certain degree
  • determiner
  • Question words used for asking for information
  • exclamation
  • Used to express excitement, shock, or surprise
  • Used to ask people to repeat something they said

growth

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US / grəʊθ /

UK / groʊθ /

A2
  • noun
  • Improvement, development in a skill over time
  • A mass on the skin or body part related to illness
  • Act of growing

current

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US / 'kʌrənt /

UK / ˈkɚrənt, ˈkʌr- /

A2
  • adjecitve
  • Happening or being in the present time
  • noun
  • Electricity flowing through wires
  • Movement of water in a river, or air in the sky

borrow

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US / ˈbɒrəʊ /

UK / ˈbɑ:roʊ /

A2
  • verb
  • To take and later return something from another
  • To carry one number to another column when adding

even

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US / 'i:vn /

UK / ˈivən /

A1
  • adjecitve
  • Being equal in influence, power, possibility etc.
  • Being divided equally or fairly
  • (Of teams/contest) with similar chances of success
  • Smooth, level, or regular
  • Can be divided by 2; ending in 2, 4, 6, 8, or 0
  • At a regular, equally steady manner
  • Remaining steady and unchanging
  • adverb
  • (When this is surprising) as well; too
  • (Used to compare two things/stress the difference)
  • verb
  • To make something level; to flatten
  • To make something equal

place

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US / pleɪs /

UK / ples /

A1
  • noun
  • Particular location, area or region
  • verb
  • To put someone in a particular type of situation
  • To put something in a certain location or position

essentially

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US / ɪˈsenʃəli /

UK / ɪˈsenʃəli /

A2
  • adverb
  • Basically; (said when stating the basic facts)

happen

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US / 'hæpən /

UK / ˈhæpən /

A1
  • verb
  • To take place or occur

disappear

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US / ˌdɪsəˈpɪə(r) /

UK / ˌdɪsəˈpɪr /

A1
  • verb
  • To no longer see because it's not there any more

that

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US / ðæt /

UK / ðæt, ðət /

A1
  • adjecitve
  • The person or thing being talked about
  • Used to identify something both the speakers know
  • adverb
  • Used to reinforce adjectives and adverbs
  • To such a degree
  • conjunction
  • Used to connect a noun clause
  • Used to introduce an adverbial clause
  • Used to introduce a noun clause
  • determiner
  • Used as a noun to refer to something
  • pronoun
  • Referring an object far away
  • Used to refer to the relative pronoun ‘which’

example

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US / ɪgˈzɑ:mpl /

UK / ɪɡˈzæmpəl /

A1
  • noun
  • Thing, person which represents a category

apple

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US / ˈæpl /

UK / ˈæpəl /

A1
  • noun
  • Hard round red or green fruit with a white center

profit

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US / 'prɒfɪt /

UK / 'prɑ:fɪt /

A2
  • noun
  • Benefit from doing something
  • Money earned from sales, after costs are deducted
  • verb
  • To be a benefit to someone
  • To earn money from something

about

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US / ə'baʊt /

UK / əˈbaʊt /

A1
  • adverb
  • To be ready to; going to
  • Nearly; approximately; roughly
  • Near; next to; close to
  • In every direction; in the area of
  • preposition
  • Concerning or of (a topic)

then

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US / ðen /

UK / ðɛn /

A1
  • adverb
  • A time that is not now
  • Following another thing in time or arrangement
  • Following on reasonably from what was just stated
  • At that time, not now

matter

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US / 'mætə(r) /

UK / ˈmætɚ /

A1
  • noun
  • Material all things are made of that fills space
  • Problem or reason for concern
  • verb
  • To be of great importance; to count

imagine

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US / ɪ'mædʒɪn /

UK / ɪˈmædʒɪn /

A1
  • verb
  • To think creatively about; form mental picture of

sell

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US / sel /

UK / sɛl /

A1
  • verb
  • To exchange something for money
  • To persuade people to do, like or agree

somehow

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US / ˈsʌmhaʊ /

UK / ˈsʌmˌhaʊ /

A1
  • adverb
  • In a way that is not known or certain

will

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US / wɪl /

UK / wɪl /

A1
  • noun
  • Desire or choice of someone
  • Document saying who gets your money when you die
  • Strong desire to do something; determination
  • Desire to do something; strong wish to do
  • other
  • Used with verbs to express the future
  • verb
  • To leave property to someone after your death
  • To use mental effort to make something happen
  • Am (is, are) likely to do
  • To influence someone to do something
  • To make something happen by strongly wanting it

contract

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US / 'kɒntrækt /

UK / 'kɑ:ntrækt /

A1
  • noun
  • Legal agreement, e.g. for doing work for money
  • Agreement to pay someone to kill a person
  • verb
  • To become ill as a result of getting a disease
  • To make an agreement for doing work for money
  • To reduce in size, length due to heat loss
  • To reduce the amount of

market

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US / ˈmɑ:kɪt /

UK / ˈmɑ:rkɪt /

A1
  • noun
  • Need or demand for a particular product or service
  • Area or region where a certain product is sold
  • Public event where people sell goods on tables
  • Institution where stocks are bought and sold
  • verb
  • To publicize products to get you to buy; advertise

always

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US / 'ɔ:lweɪz /

UK / ˈɔlwez,-wɪz,-wiz /

A1
  • adverb
  • For a very long time
  • At all times; in every situation
  • For ever

should

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US / ʃʊd /

UK / ʃʊd /

A1
  • other
  • Used to indicate what is proper or reasonable

thousand

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US / ˈθaʊznd /

UK / ˈθaʊzənd /

A1
  • number
  • Number 1,000

guess

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US / ɡes /

UK / ɡɛs /

A1
  • noun
  • Answer given when you don't know if it is correct
  • verb
  • To give an answer without knowing if it is correct

use

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US / ju:s /

UK / ju:s /

A1
  • noun
  • Ability to employ something
  • Need to enable it to work
  • Permission to do something with something
  • Act of spending money
  • Operation of a machine for its function
  • verb
  • To have; to eat, drink, consume etc.
  • To need to operate or work
  • To operate a machine, e.g. a computer
  • To treat a person badly
  • To do something with, for a task or purpose

never

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US / 'nevə(r) /

UK / ˈnɛvɚ /

A1
  • adverb
  • Not ever; not at any time

for

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US / fə(r) /

UK / fɔr,fə /

A1
  • preposition
  • Used to show the purpose, or need of something

why

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US / waɪ /

UK / hwaɪ, waɪ /

A1
  • adverb
  • Question word to ask for a reason
  • exclamation
  • (Used to express surprise or approval)

situation

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US / ˌsɪtʃuˈeɪʃn /

UK / ˌsɪtʃuˈeʃən /

A1
  • noun
  • Place, position or area that something is in
  • Circumstance or condition surrounding an event
  • An unexpected problem or difficulty

math

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US / mæθ /

UK / mæθ /

A2
  • noun
  • Study or science of numbers and shapes

exchange

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US / ɪksˈtʃeɪndʒ /

UK / ɪksˈtʃendʒ /

A2
  • noun
  • Sharing/directing a look, etc. at someone else
  • Short discussion or talk
  • The place you can change money to another currency
  • Place where things or services are exchanged
  • Act of returning something to a store
  • Act of giving a thing in return for another thing
  • verb
  • To share (a look, a few words etc.)
  • To sell one currency to get another
  • To return something to a store
  • To give things of similar value to each other

just

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US / dʒʌst /

UK / dʒʌst /

A1
  • adjecitve
  • Proper or appropriate; as is deserved
  • Doing or being what is right or fair
  • Legally correct; having enough evidence
  • adverb
  • Almost; nearly
  • Exactly at the time of
  • Exactly (the same as, like)

amount

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US / ə'maʊnt /

UK / əˈmaʊnt /

A1
  • noun
  • Quantity of something
  • verb
  • To add up to a certain figure

shortage

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US / ˈʃɔ:tɪdʒ /

UK / ˈʃɔ:rtɪdʒ /

A2
  • noun
  • A lack of something necessary

much

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US / mʌtʃ /

UK / mʌtʃ /

A1
  • adjecitve
  • Very; to a high level or degree
  • adverb
  • A lot; large amount; a high degree of
  • Nearly; basically
  • On many occasions; often
  • noun
  • A large amount; a great quantity

cold

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US / kəʊld /

UK / kold /

A1
  • adjecitve
  • Having a very low temperature
  • Being unfriendly or lacking emotion
  • noun
  • Illness of sneezing, coughing, and a sore throat

short

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US / ʃɔ:t /

UK / ʃɔrt /

A1
  • adverb
  • Less than what is needed
  • Suddenly stopping what you are saying or doing
  • verb
  • (Of electric circuit) to spark because faulty
  • adjecitve
  • Measuring a small distance
  • Happening for a small amount of time
  • Unfriendly or rude

set

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US / set /

UK / sɛt /

A1
  • adjecitve
  • Prepared for something; ready
  • noun
  • Complete group of something
  • Place where a television show or movie is filmed
  • Group of games in a tennis match
  • Device that receives radio or television signals
  • verb
  • To make a clock state or ring at a particular time
  • To decide upon or choose something
  • To make something ready for use (e.g. table)
  • To decide on a price for something
  • To become hard (of glue, concrete etc.)
  • To be located in a specific place or time
  • To put (e.g. a vase) down carefully in a place
  • To put someone in a certain condition or state
  • (Of the sun) to go lower than the horizon

well

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US / wel /

UK / wɛl /

A1
  • adjecitve
  • Being in a fortunate, good condition or state
  • Healthy and in good condition
  • adverb
  • In an acceptable, proper, or successful manner
  • In a complete, total, or full manner
  • A great and considerable degree
  • In a successful way, in a good or satisfactory way
  • exclamation
  • Used to begin or continue a particular statement
  • Used to show you want to start saying something
  • Used to express that you are waiting for a reply
  • You say this to change the topic of a conversation
  • Used to indicate you are making a final remark
  • noun
  • Long deep hole in the ground to get water
  • verb
  • To cause your eyes to fill with tears

garage

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US / 'ɡærɑ:ʒ /

UK / ɡəˈrɑʒ, -ˈrɑdʒ /

A2
  • noun
  • Place for keeping a car

seller

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US / 'selə(r) /

UK / ˈsɛlɚ /

A2
  • noun
  • Person or group who sells something

definitely

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US / ˈdefɪnətli /

UK / ˈdefɪnətli /

A2
  • adverb
  • Without question; beyond doubt

bad

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US / bæd /

UK / bæd /

A1
  • adjecitve
  • Not good; wrong
  • Lacking in good morals; evil
  • No longer fresh; spoiled

sake

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US / seɪk /

UK / sek /

A2
  • noun
  • Japanese rice wine
  • Interest or benefit of someone or something

year

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US / jə: /

UK / jɪr /

A1
  • noun
  • Unit of time equal to 12 months or 365 or 366 days
  • Used to refer to the age of a person

chuckle

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US / ˈtʃʌkl /

UK / ˈtʃʌkəl /

B2
  • noun
  • Quiet amused laugh
  • verb
  • To laugh quietly, as when amused

how

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US / haʊ /

UK / haʊ /

A1
  • adjecitve
  • To what degree? in what amount?
  • adverb
  • (Used to explain the way to do something)
  • exclamation
  • For what purpose or reason?
  • (Used to ask someone or something's condition)

price

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US / praɪs /

UK / praɪs /

A1
  • noun
  • Person's name
  • Cost of something in money
  • verb
  • To determine or set the cost of something

you

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US / jʊ /

UK / ju /

A1
  • pronoun
  • Person someone is speaking or writing to
  • Person or people in general

make

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US / meɪk /

UK / mek /

A1
  • noun
  • Product made by a particular company; brand
  • verb
  • To arrange or prepare something e.g. dinner
  • To get to (a place) on time
  • To gain the status of (teacher, lawyer, etc.)
  • To create something by putting things together
  • To earn a certain amount of money at a job
  • To cause or force a person to do something
  • To cause something to happen or be formed

the

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US / ðə /

UK / ðə /

A1
  • article
  • Used to refer to something already mentioned
  • Used to show there is only one of something
  • determiner
  • Used to describe all of a family

settle

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US / 'setl /

UK / ˈsɛtl /

A2
  • noun
  • Type of wooden seat
  • verb
  • To make (a child, etc.) feel calm/ready for sleep
  • To complete or finalize e.g. a contract or debt
  • To end some troubles by reaching an agreement
  • To become accustomed to a new environment
  • (Of liquids) to move to the bottom of a container

free

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US / fri: /

UK / fri /

A1
  • adjecitve
  • Living, happening without being controlled
  • Costing no money
  • Not working; not busy
  • verb
  • To release (e.g. bird) from a cage or prison

let

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US / let /

UK / lɛt /

A1
  • verb
  • To allow someone to do something
  • Introducing a suggestion to do something together
  • To rent a house, etc. to others

this

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US / ðɪs /

UK / ðɪs /

A1
  • adjecitve
  • Used to indicate something already been discussed
  • Used to indicate something happening around now
  • adverb
  • An indication by a physical motion or gesture
  • A specific amount of
  • determiner
  • Person, thing, or idea near you
  • pronoun
  • Person, thing that has already been discussed

margin

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US / ˈmɑ:dʒɪn /

UK / ˈmɑ:rdʒən /

B1
  • noun
  • Edge of an area
  • Edge or border of a page on above, below
  • Profit; money left over after all costs

forward

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US / 'fɔ:wəd /

UK / ˈfɔrwəd /

A1
  • adjecitve
  • Toward what is ahead; in front
  • Acting in a socially aggressive manner; pushy
  • adverb
  • Toward the front in place; in front
  • Toward a future time; to a more advanced state
  • verb
  • To send something to another address or person

might

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US / maɪt /

UK / maɪt /

A1
  • other
  • Used to politely request an action
  • Used to express that something could happen
  • Power, strength, force or influence

than

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US / ðən /

UK / ðən /

A1
  • conjunction
  • Used to compare two things that are not equal

also

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US / 'ɔ:lsəʊ /

UK / ˈɔlso /

A1
  • adverb
  • In addition; too; in a similar way

one

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US / wʌn /

UK / wʌn /

A1
  • pronoun
  • You; we; people in general; someone
  • The thing or person previously referred to
  • adjecitve
  • Used to refer to people generally
  • Being a strong example of (something mentioned)
  • number
  • Number 1

kind

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US / kaɪnd /

UK / kaɪnd /

A1
  • adjecitve
  • In a caring and helpful manner
  • friendly and considerate
  • noun
  • One type of thing

take

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US / teɪk /

UK / tek /

A1
  • noun
  • Filming of a single scene for TV or the movies
  • verb
  • To accept something that is offered
  • To use a method of traveling, e.g. a bus or train
  • To use a camera to make (a photo)
  • To pick up something and go away with it
  • To study a subject in school
  • To attempt to pass (an exam)
  • To require a certain amount of time, money, space

pay

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US / peɪ /

UK / pe /

A1
  • noun
  • Money you receive from your job, work, etc.
  • verb
  • To give money for goods or work done
  • To give (attention, respect, etc.) to
  • To be punished or suffer for something you did
  • To make (a visit) to a person or place

fast

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US / fɑ:st /

UK / fæst /

A1
  • adjecitve
  • In a way that is difficult to move or change
  • Moving or able to move quickly
  • Showing time that is later than the actual time
  • adverb
  • With a great deal of speed
  • noun
  • Period of time when a person chooses not to eat
  • verb
  • To refuse food for a long time

guarantee

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US / ˌɡærən'ti: /

UK / ˌɡærənˈti /

A2
  • noun
  • A promise to repair a broken product
  • Promise that something will be done as expected
  • verb
  • To promise to repair a broken product
  • To promise that something will happen or be done
  • To promise to pay if another person fails to do so

male

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US / meɪl /

UK / ˈmel /

A2
  • adjecitve
  • Characteristic of boys or men
  • noun
  • A member of the sex that fertilizes eggs

arbitrage

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US / ˈɑ:bɪtrɑ:ʒ /

UK / ˈɑ:rbətrɑ:ʒ /

B2
  • noun
  • Buying a commodity, gold etc. to sell it quickly

show

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US / ʃəʊ /

UK / ʃo /

A1
  • noun
  • False display of love, emotion or action
  • An event for displaying or promoting goods
  • Play, opera or theater production
  • Presentation that is broadcast on TV or radio
  • verb
  • To be easily seen or displayed
  • To display your emotions or feelings
  • To let someone see something; display
  • To explain or teach how something is done
  • To lead someone somewhere; point them to something
  • To prove something to be true, correct
  • To reveal or allow something to be seen

way

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US / weɪ /

UK / we /

A1
  • adverb
  • Used to emphasize the amount of something
  • noun
  • Particular aspect of something being thought about
  • One of various choices that could be made
  • Particular existing condition or state
  • (Often long) distance or length of time
  • How something is done
  • Route to go to a place
  • Small street
  • Usual behavior, emotions or habits of someone

snap

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US / snæp /

UK / snæp /

B1
  • noun
  • An informal word for a photograph
  • verb
  • To close your mouth quickly like biting something
  • To break something dry and thin, e.g. a branch
  • To lose control of your emotions; get angry

all

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US / ɔ:l /

UK / ɔl /

A1
  • adverb
  • Completely; totally
  • determiner
  • Being every one of something
  • pronoun
  • 100% of something; the complete amount

specify

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US / ˈspesɪfaɪ /

UK / ˈspɛsəˌfaɪ /

A2
  • verb
  • To state, name or mention exactly and clearly

dollar

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US / ˈdɒlə(r) /

UK / ˈdɑ:lə(r) /

A1
  • noun
  • A basic unit of money equal to 100 cent

subtract

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US / səbˈtrækt /

UK / səbˈtrækt /

B2
  • other
  • To take away a value or amount from another
  • verb
  • To take away a value or amount from another

list

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US / lɪst /

UK / lɪst /

A1
  • noun
  • Lean of a boat to one side
  • Series of written names, words or numbers
  • verb
  • To lean to one side, like a boat or ship
  • To present for sale for a specific price
  • To write a series of names, words, or numbers

ago

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US / əˈgəʊ /

UK / əˈgoʊ /

A1
  • adverb
  • At a specified length of time in the past

agree

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US / əˈgri: /

UK / əˈɡri /

A1
  • verb
  • To have the same opinion as someone else

they

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US / ðeɪ /

UK / ðe /

A1
  • pronoun
  • Two or more people, animals, or things

simplicity

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US / sɪm'plɪsətɪ /

UK / sɪmˈplɪsɪti /

C1
  • noun
  • Being easy to understand or use

know

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US / nəʊ /

UK / noʊ /

A1
  • verb
  • To be familiar with a person or place, thing
  • To feel sure or be convinced about something
  • To discover or be aware of something
  • To be able to distinguish
  • To have knowledge of things

interest

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US / 'ɪntrəst /

UK / ˈɪntrɪst, -tərɪst, -ˌtrɛst /

A1
  • noun
  • Best or most advantageous thing for someone
  • Activity or subject one enjoys doing or learning
  • Fee for borrowing money
  • verb
  • To make someone want to know about something
  • To persuade to do, become involved with something

have

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US / həv /

UK / hæv /

A1
  • verb
  • To drink, smoke, eat or use something
  • To experience the effects of something
  • To organize an event, or join in an activity
  • To own, possess, or hold something
  • To cause to happen or produce a particular effect

away

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US / ə'weɪ /

UK / əˈwe /

A1
  • adjecitve
  • Not present
  • adverb
  • Disappear completely
  • Doing something with a lot of energy
  • Not here; far from here; in a different direction
  • To a different area, location

could

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US / kəd /

UK / kʊd /

A1
  • other
  • Past form of 'can' to mean have ability
  • Used to ask for something politely, or to offer

october

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US / ɒkˈtəʊbə(r) /

UK / ɑkˈtobɚ /

A1
  • noun
  • 10th month of the year

give

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US / ɡɪv /

UK / ɡɪv /

A1
  • noun
  • Degree of flexibility in something, a material
  • verb
  • To hand over or present something to someone
  • To cause someone to have or experience something

can

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US / kæn /

UK / kən,kæn /

A1
  • noun
  • A metal container for storing food
  • other
  • Able to; have the skill to; have the time to
  • verb
  • To have permission to
  • To be possible to do
  • To preserve food by sealing it in a metal container

same

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US / seɪm /

UK / sem /

A1
  • adjecitve
  • Being equal in quality and amount
  • Identical; not different
  • Not changing; constant

but

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US / bət /

UK / bʌt,bət /

A1
  • conjunction
  • Used before you say something different, opposite

not

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US / nɒt /

UK / nɑt /

A1
  • adverb
  • Word indicating the negative
  • (Used to form the negative of verbs)

now

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US / naʊ /

UK / naʊ /

A1
  • adverb
  • At the present time or moment
  • Right away or in the next possible moment
  • Used to refer to something that just happened
  • Time between the present and a moment in the past
  • conjunction
  • Resulting from or because of something

opportunity

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US / ˌɒpə'tju:nətɪ /

UK / ˌɑpɚˈtunɪti, -ˈtju- /

A2
  • noun
  • Time, situation when a thing might be done; chance

really

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US / ˈri:əli /

UK / ˈriəˌli, ˈrili /

A1
  • adverb
  • Used to stress something that is said; definitely
  • In a true or accurate manner
  • Very

borrowing

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US / ˈbɔrəʊɪŋ, ˈbɔ:r- /

UK / ˈbɑroɪŋ, ˈbɔr- /

A2
  • verb
  • To take and later return something from another
  • To carry one number to another column when adding

pricing

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US / ˈpraɪsɪŋ /

UK / ˈpraɪsɪŋ /

A1
  • verb
  • To determine or set the cost of something

loan

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US / ləʊn /

UK / lon /

A2
  • noun
  • Act of allowing someone to borrow something
  • verb
  • To give money, etc. that must be paid back

our

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US / 'aʊə(r) /

UK / aʊr /

A1
  • determiner
  • Belonging to us

maybe

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US / ˈmeɪbi /

UK / ˈmebi /

A1
  • adverb
  • Possibly but not certainly; perhaps

want

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US / wɔnt /

UK / wɑnt, wɔnt /

A1
  • noun
  • Something you desire or wish for
  • State or condition of poverty
  • verb
  • To desire or wish for something; hope for a thing

become

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US / bɪ'kʌm /

UK / bɪˈkʌm /

A1
  • verb
  • To begin to be; grow to be; develop into
  • To be suitable for a particular job or role

spoil

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US / spɔɪl /

UK / spɔɪl /

A2
  • verb
  • To damage something, usually by treating it poorly
  • (Of food) to go bad
  • To overindulge and harm the character of a child
  • To treat someone extremely well

would

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US / wʊd /

UK / wʊd /

A1
  • other
  • Used to indicate something imagined
  • Used to ask or request something politely
  • Verb used to indicate possibility, request etc.
  • Used to indicate a preference
  • Used to indicate a reaction
  • Indicates something that occurred repeatedly
  • Used to indicate willingness or ability to do
  • Subtitles section
  • Male voiceover: Let's say that the current market settlement price for a Futures Contract that specifies the delivery of a thousand pounds of apples on October 20th and just for the simplicity of the math in this example,
  • let's assume that that is one year away and the current settlement price, the current market price on the future exchange for delivery on that date is $300.
  • Let's also assume that the current market price, if you were to buy or sell apples today not on October 20th, which is a year away but today, let's assume that the current market price is $200.
  • Let's also assume that if you were to take out a $200 loan that you would have to pay 10% interest.
  • If you were to borrow $200 today, you would essentially have to pay back $220 in a year.
  • Now, given all of the parameters that I've set up, is there a way to make risk-free profits?
  • Is there way to kind of arbitrage this situation?
  • And as you can imagine, there is and what we can do is, we can borrow $200, Let me list it all out.
  • We can borrow $200 and then use that $200 to buy 1,000 pounds of apples.
  • Then we buy 1,000 pounds of apples.
  • We keep them in our garage or some place like that and then we also sell or I guess we could say, we become the seller on this Futures Contract or we sell the Futures short, I guess is another way to think about it.
  • We also become the seller on the Futures Contract.
  • Essentially, we are agreeing to sell 1,000 pounds of apples on October 20th, a year from now for $300.
  • So I wanna show you is if we set it up this way, we are guaranteed to make money no matter what happens to the price of apples and that's why we're calling it an arbitrage because if you fast forward one year,
  • so let's fast forward one year.
  • In one year, we definitely have 1,000 pounds of apples and just for the sake of simplicity, let's assume that apples don't get bad that I've somehow freeze-dried them or I don't know.
  • These are apples that never spoil.
  • (chuckles) Let's say a year from now, I have the thousand pounds of apples so I give the apples to settle the Futures Contract.
  • Give apples to settle the contract and then of course, I have my loan.
  • I have my loan of $200 but guess what?
  • When I settled the contract, when I settled the Futures Contract, I got $300.
  • So, I get 300 dollars and what do I owe?
  • Well, I owe $220 on my loan.
  • Let me subtract that out.
  • I owe $220 and so I made a guaranteed risk-free $80 of profit in one year and we're not thinking about how much money I might have had to set aside for margin but this essentially, just free money and if you think about it,
  • if this settlement price is anything, if the settlement price is anything above the $220 then I'm going to make a risk-free profit.
  • One way to think about Futures pricing is even if you think there's going to be a cold snap and apples are going to disappear and there's going to be the shortage of apples and so you might say, "Hey, maybe the apple prices "will go up." a year ago,
  • there's always going to be a way to arbitrage it if the settlement price, if the growth in price is more than the cost of borrowing the same amount of money, the cost of borrowing $200.
  • In this situation, the cost of borrowing is $20.
  • The settlement price really shouldn't be, if we assume that there's no arbitrage opportunities, it really shouldn't be more than $220.