The Relationship Between the Spot and Futures Prices of Financial

Multiple Choice

The relationship between the spot and futures prices of financial futures is given by:

A) [Futures price] = Spot price(1 + rf) ^t (where rf = risk-free rate)
B) [Futures price] = Spot price (1 + rf - y) ^t (where y = dividend yield or interest rate)
C) [Futures price] = Spot price (1 + rm) ^t (where rm = market rate of return)
D) None of the above