On 25 February 2008 you could have purchased a futures contract from Intrade that would pay you $1 if Barack Obama wins the 2008 Democratic Party nomination. At a price of $0.81, the contract for Obama carried the highest price of any Democratic candidate. This tells you ________.

Question

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The price of a futures contract can be interpreted as the market's belief about the likelihood of an event occurring. In this case, the fact that the Obama contract had the highest price of any Democratic candidate suggests that the market believed he had the best chance of winning the nomination. The price of $0.81 can be interpreted as the market's view that Obama had an 81% chance of winning.

On 25 February 2008 You Could Have Purchased a Futures