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.

---

Definitions:

Interest

A feeling of curiosity or concern about something or someone, often leading to engagement or investigation.

Peers

Individuals who are similar in age or status within a certain social group.

Basketball Game

A competitive sport played between two teams, where the objective is to score points by shooting a ball through the opponent's hoop.

Piaget

Refers to Jean Piaget, a Swiss developmental psychologist and philosopher known for his epistemological studies with children and his theory of cognitive development.