The equilibrium or theoretical futures price can be determined through arbitrage arguments.

Question

Quizplus · Accepted Answer

According to the principle of arbitrage, if the theoretical futures price is different from the market price, traders can make profits by taking opposite positions in the futures and spot markets, leading to price convergence. Therefore, determining the equilibrium or theoretical futures price by using arbitrage arguments is valid.

The Equilibrium or Theoretical Futures Price Can Be Determined Through