On the expiration date of a futures contract, the price of the contract__________
At expiration, the futures price converges to the spot price of the underlying asset. The remaining time to delivery is zero, so the time-based difference between the…
Choose your answer
On the expiration date of a futures contract, the price of the contract__________
Answer and explanation
Correct answer C
At expiration, the futures price converges to the spot price of the underlying asset. The remaining time to delivery is zero, so the time-based difference between the futures and spot prices disappears. The original purchase price and historical average prices do not determine this convergence.
Practice for these exams
-
Andhra Pradesh SET (APSET)