In the Absence of Arbitrage Opportunities,the Forward Contract Price Should

question 47

Multiple Choice

In the absence of arbitrage opportunities,the forward contract price should be equal to the current price plus

• A) Contract price.
• B) The cost of carry.
• C) Margin requirement.
• D) The price discovery rate.
• E) The convenience return.

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Definitions:

Financial Instruments

Assets that can be traded, including stocks, bonds, derivatives, and currencies.

U.S. Government

The federal government of the United States, a constitutional republic comprising the Executive, Legislative, and Judicial branches.

Market-Value Weighted

An indexing method where the weight of each constituent security in an index or portfolio is based on its total market capitalization, favoring larger companies.