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 maturity of the forward contract, the spot price can indeed be greater than, equal to, or less than the delivery price. This is because the spot price at maturity is determined by market conditions at that time, which can vary in relation to the delivery price agreed upon when the forward contract was initiated.

At Maturity of the Forward Contract, the Following Is True