The Relationship Between the Spot and Futures Prices of Financial

question 65

Multiple Choice

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

• A)[Futures price] = Spot price x (1 + r_f)^t (where r_f = risk-free rate).
• B)[Futures price] = Spot price x (1 + r_f - y)^t (where y = dividend yield or interest rate).
• C)[Futures price] = Spot price x (1 + r_m)^t (where r_m = market rate of return).
• D)[Futures price] = Spot price x (1 + r_m - r_f)^t.

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Definitions:

Salary Expense

The total expense incurred by a company to compensate its employees on a salaried basis during a specific period.

Salaries Payable

An account recording the amount owed to employees for services rendered but not yet paid.

Weekly Salaries

Weekly salaries are fixed amounts paid to employees on a weekly basis as compensation for their work.

Salary Expense

The cost incurred by an employer for the payment of salaries to employees, considered an operating expense.