If There Is No Risk Premium in the Futures Market

question 34

Multiple Choice

If there is no risk premium in the futures market then:

• A) the futures price equals the spot price
• B) the futures price at maturity will equal the expected spot at expiry
• C) the current futures price equals the expected spot at expiry
• D) all of these choices

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Definitions:

Discrimination

Biased or unfair actions against people from distinct groups, mainly due to their race, age, gender, or physical abilities.

Out-Group

A group toward which an individual feels opposition, rivalry, or hostility.

Primary Groups

Groups composed of the people who are most important to our sense of self; members’ relationships are typically characterized by face-to-face interaction, high levels of cooperation, and intense feelings of belonging.

Secondary Groups

Groups that are larger and less intimate than primary groups; members’ relationships are usually organized around a specific goal and are often temporary.