At the expiration of a futures contract, the futures price will be:
A)Greater than spot price
B)Equal to the spot price
C)Less than the spot price
D)More than the forward price

Question

Quizplus · Accepted Answer

At the expiration of a futures contract, the futures price will converge to the spot price because the futures price is essentially a predicted or estimated price of the underlying asset at the future date, based on the current spot price and anticipated changes in supply and demand. Therefore, as the expiration date approaches, the futures price will approach and eventually equal the spot price.

At the Expiration of a Futures Contract, the Futures Price