Futures Contract Pricing

In the world of derivatives, futures contracts are agreements to buy or sell an asset at a predetermined price at a specified time in the future. The pricing of futures contracts is influenced by various factors, including the spot price of the underlying asset, interest rates, and the cost of carry.

Consider a futures contract on a commodity that has a current spot price of $100. The risk-free interest rate is 5% per annum, and the contract matures in 1 year. What would be the fair price of the futures contract at maturity, assuming no storage costs or dividends?