Chapter 10. Pricing Financial Forwards and Futures Study Notes contain 20 pages covering the following learning objectives:
* Differentiate between investment and consumption assets.
* Define short-selling and calculate the net profit of a short sale of a dividend-paying stock.
* Describe the differences between forward and futures contracts and explain the relationship between forward and spot prices.
* Calculate the forward price given the underlying asset’s spot price, and describe an arbitrage argument between spot and forward prices.
* Distinguish between the forward price and the value of a forward contract.
* Calculate the value of a forward contract on a financial asset that does or does not provide income or yield.
* Explain the relationship between forward and futures prices.
* Calculate a forward foreign exchange rate using the interest rate parity relationship.
* Calculate the value of a stock index futures contract and explain the concept of index arbitrage.
After reviewing the notes, you will be able to apply what you learned with practice questions.Shop Courses