The Relationship Between the Spot and Futures Prices of Financial

question 49

Multiple Choice

The relationship between the spot and futures prices of financial futures is given by:

• A) [Futures price] = Spot price(1 + rf)^t (where rf = risk-free rate)
• B) [Futures price] = Spot price (1 + rf - y)^t (where y = dividend yield or interest rate)
• C) [Futures price] = Spot price (1 + rm)^t (where rm = market rate of return)
• D) None of the above

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Definitions:

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business over a specific period of time.

Endowment Contribution

A donation made to an institution or organization with the stipulation that it be invested and the principal remain intact, while the investment income can be used for organizational purposes.

Restricted Contribution

Funds given to an organization with stipulations on their usage, requiring the funds to be spent in certain ways or restricted to specific purposes.

Unrestricted Contribution

refers to donations or contributions made to a non-profit organization without any conditions, allowing the organization to use the funds wherever they are most needed.