Which Equation Is Used to Define the Futures Price?
A) $\frac { F _ { 1 } ( S / € ) } { S _ { 0 } ( S / € ) }$

question 57

Multiple Choice

Which equation is used to define the futures price?

• A) \(\frac { F _ { 1 } ( S / € ) } { S _ { 0 } ( S / € ) }\) = \(\frac { ( 1 + i _ { \$} } { \left( 1 + i _ { € } \right) }\)
• B) \(F _ { 1 }\) = \(\frac { C _ { u T ^ { - } - C _ { d T } } } { S _ { 0 } ( u - d ) }\)
• C) \(F _ { 1 }\) = \(\frac { \ln ( F / E ) + .5 \sigma ^ { 2 } T } { \sigma \sqrt { T } }\)
• D) \(\frac { F _ { 1 } ( S / € ) } { S _ { 0 } ( S / € ) }\) = \(\frac { ( 1 + i_{€} ) } { ( 1 + i _{\$} ) }\)

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Definitions:

Negotiable Instrument

A written promise or order to pay a specific amount of money that can be transferred by endorsement or delivery, such as checks and promissory notes.

Claim Negligence

The legal accusation that a party failed to exercise a reasonable standard of care, resulting in harm or damage to another.

Dishonor

The refusal or inability of an entity to fulfill a financial obligation, such as a check or bill.

Primarily Liable

Refers to the primary obligation or responsibility for fulfilling a debt or obligation, typically before any secondary or tertiary parties.