Which equation is used to define the futures price?
A) $\frac { F ( \$ / € ) } { S ( \$ / € ) } = \frac { 1 + i _ { \$ } } { 1 + i _ { € } }$

B) $\frac { F ( \$ / € ) } { S ( \$ / € ) } = \frac { 1 + i _ { €
} } { 1 + i _ { \$ } }$
C) $\frac { F ( \$ / € ) - S ( \$ / € ) } { S ( \$ / € ) } = \frac { 1 + i _ { \$ } } { 1 + i _ { € } }$

D) $F ( \$ / € ) - S ( \$ / € ) = i _ { \$ } - i _ { € }$

Question

Which equation is used to define the futures price?
A) $\frac { F ( \$ / € ) } { S ( \$ / € ) } = \frac { 1 + i _ { \$ } } { 1 + i _ { € } }$

B) $\frac { F ( \$ / € ) } { S ( \$ / € ) } = \frac { 1 + i _ { €
 } } { 1 + i _ { \$ } }$
C) $\frac { F ( \$ / € ) - S ( \$ / € ) } { S ( \$ / € ) } = \frac { 1 + i _ { \$ } } { 1 + i _ { € } }$

D) $F ( \$ / € ) - S ( \$ / € ) = i _ { \$ } - i _ { € }$

Quizplus · Accepted Answer

The correct equation for defining the futures price is based on the interest rate parity, which is represented by choice A.

Which Equation Is Used to Define the Futures Price? A) F($/€)S($/€)=1+i$1+i€\frac { F ( \$ / € ) } { S ( \$ / € ) } = \frac { 1 + i _ { \$ } } { 1 + i _ { € } }S($/€)F($/€)​=1+i€​1+i$​​

Which Equation Is Used to Define the Futures Price?
A) $\frac { F ( \$ / € ) } { S ( \$ / € ) } = \frac { 1 + i _ { \$ } } { 1 + i _ { € } }$