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Assume No Transactions Costs Exist for Any Futures or Forward

Question 3

Multiple Choice

Assume no transactions costs exist for any futures or forward contracts. The price of British pound futures with a settlement date 180 days from now will:


A) definitely be above the 180-day forward rate.
B) definitely be below the 180-day forward rate.
C) be about the same as the 180-day forward rate.
D) none of the above; there is no relation between the futures and forward prices.

Correct Answer:

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