Assume No Transactions Costs Exist for Any Futures or Forward

question 3

Multiple Choice

Assume no transactions costs exist for any futures or forward contracts. The price of British pound futures with a settlement date 180 days from now will:

• A)definitely be above the 180-day forward rate.
• B)definitely be below the 180-day forward rate.
• C)be about the same as the 180-day forward rate.
• D)none of the above; there is no relation between the futures and forward prices.

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Definitions:

Encoding Failure

The inability to recall specific information because it was not encoded into memory effectively.

Acoustic Storage

The part of memory that holds audio information for a brief period following hearing it.

Auditory Decay

Auditory decay refers to the loss or fading of memory traces of sounds in the short-term memory over time without rehearsal.

Prospective Forgetting

Not remembering to carry out some intended action.