The Expectations Hypothesis of Futures Pricing

question 43

Multiple Choice

The expectations hypothesis of futures pricing

• A) is the simplest theory of futures pricing.
• B) states that the futures price equals the expected value of the future spot price of the asset.
• C) is not a zero-sum game.
• D) is the simplest theory of futures pricing and states that the futures price equals the expected value of the future spot price of the asset.
• E) is the simplest theory of futures pricing and is not a zero-sum game.

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Definitions:

Seasoned Equity Offering

When a company with publicly traded shares issues additional shares. Also known as a “secondary” or “follow-on” offering.

Primary Market

The primary market is the financial market where new securities are issued and sold for the first time, directly from the issuer.

Secondary Market

A marketplace where investors buy and sell securities or assets that have been previously issued, often through exchanges or over-the-counter markets.

Equity Carve-Outs

The process by which a parent company sells a portion of the equity in a subsidiary to public investors.