As an economic function of futures markets, what does "price discovery" mean?
A) The futures price and spot price converge over time.
B) The spot price is a discounted value of the futures price.
C) The futures price provides information about the expected future spot price.
D) In equilibrium, the spot price and futures price are equal.

Question

Quizplus · Accepted Answer

Price discovery refers to the process by which futures prices provide information about the expected future spot prices, reflecting the collective market expectations.

As an Economic Function of Futures Markets, What Does "Price