As an Economic Function of Futures Markets, What Does "Price

question 3

Multiple Choice

As an economic function of futures markets, what does "price discovery" mean?

• A) The futures price and spot price converge over time.
• B) The spot price is a discounted value of the futures price.
• C) The futures price provides information about the expected future spot price.
• D) In equilibrium, the spot price and futures price are equal.

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Definitions:

Relative Frequencies

The ratio of the number of times a particular value occurs to the total number of observations, used in statistical analysis.

Third Quartile

A statistical term describing the value below which 75% of the data in a data set falls.

Box Plot

A graphical representation of a dataset showing its central tendency, dispersion, and outliers through quartiles.

Minimum

The lowest value in a given set of numbers, data points, or measurements.