DEFINITION of 'Political Futures'

An investment wherein the payout comes after an election, based on the winning party. Investors pay a flat fee to purchase the future and will receive $100 if the candidate they chose wins, and $0 in the event of a loss. The price of the future fluctuates throughout the election, based on candidate support.

BREAKING DOWN 'Political Futures'

The purchase price for the future is based on the probable outcome of the election. If candidate A is expected to win, the price for the future will be higher than it would be for candidate B. This essentially means, like any investment, the riskier the investment, the higher the payoff.

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