At maturity of the forward contract,the following is true of the spot price and delivery price locked-in using the forward contract:
A)The spot price is greater than the delivery price.
B)The spot price is less than the delivery price.
C)The spot price is equal to the delivery price.
D)The spot price can be greater,equal to,or less than the delivery price.

Question

Quizplus · Accepted Answer

At the maturity of a forward contract, the spot price—the current market price of the underlying asset—can indeed be greater than, equal to, or less than the delivery price agreed upon in the forward contract. This variability depends on market conditions and changes in the value of the underlying asset over the life of the contract.

At Maturity of the Forward Contract,the Following Is True of the Spot