Question

1.) As with options, the relationship between futures prices and spot prices tend to be kept...

1.) As with options, the relationship between futures prices and spot prices tend to be kept in check by what?

2.) The price of goods today is the price that one could buy it at in the ___________ or _________ market.

3.) If you sell a futures contract and are assigned at expiration, what actually occurs?

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Homework Answers

Answer #1

1.) Strike Price. Since the profit and loss of the futures agreement will depend on difference between the future spot price and strike price.

2.) The price of goods today is the price that one could buy it at in the spot or cash market. Since, the price today is what you will buy it at in the spot market or in the cash market.

3.) If I am the seller of the futures contract, then at the expiration, I should sell the underlying asset at the strike price to the buyer or I should pay/receive the difference between the spot price at that time and strike price to settle the contract,

Please do rate me and mention doubt, ifany, in the comments section.

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