Due to arbitrage,the futures price at maturity ________.

Question

Quizplus · Accepted Answer

Arbitrage refers to the practice of buying and selling similar assets in different markets to take advantage of price differences. In the case of futures contracts, arbitrageurs would buy or sell the underlying asset in the spot market and simultaneously take an opposite position in the futures market to make a profit. This arbitrage activity typically drives the futures price to equality with the spot rate by the time the contract expires. Therefore, the correct choice is A - the futures price at maturity is driven to equality with the spot rate on that date.

Due to Arbitrage,the Futures Price at Maturity ________