GIGAMIND

Folder:
115 CFA
File:
115.080.02.05 - Reading 49 - 5. Why do Forward and Futures Prices Differ

5. Why do Forward and Futures Prices Differ?

f. explain why forward and futures prices differ;

The price of a futures contract will equal the price of an otherwise equivalent forward contract if (what goes here)?
...interest rates are known or constant.

The price of a futures contract will equal the price of an otherwise equivalent forward contract if (what goes here)?
...interest rates are uncorrelated with future prices.

If interest rates are positively correlated with future prices, then (what goes here)?
...futures will carry higher prices than forwards.


Source:
  • CFA