Question #63
Reading: Reading 30 Pricing and Valuation of Forward Commitments
PDF File: Reading 30 Pricing and Valuation of Forward Commitments.pdf
Page: 26
Status: Unattempted
Correct Answer: B
Question
What is the difference between spot and futures prices? Spot prices are always:
Answer Choices:
A. delivered to meet the futures obligation at expiration
B. equal to the futures price at futures expiration
C. lower than futures prices
Explanation
The difference between the spot and the futures price must be zero at expiration to avoid
arbitrage.