Forwards & Futures - II

Seite 1

For forwards and futures, the candidate will be able to:

• Determine forward price from prepaid forward price.

• Explain the relationship between forward price and futures price.

• Explain the relationship between forward price and future stock price.

• Use the concept of no-arbitrage to determine the theoretical value of futures and forwards.

• Given any four of call premium, put premium, forward price, strike price and interest rate, calculate

the remaining item using the put-call parity formula.