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CFA Level 1
Derivatives

Futures Contract Pricing

Very Easy Derivative Pricing And Valuation Futures Contracts

Futures contracts are standardized agreements to buy or sell an asset at a predetermined price at a specified future date. Understanding the differences between spot prices and futures prices is essential for making informed trading decisions.

If the current spot price of a commodity is $50 and the futures price for delivery in one month is $52, what is the primary factor causing the futures price to be higher than the spot price?

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